The following op/ed by ICBA President Chris Gardner first ran in The Orca on Oct. 1, 2020.
Finally, a bold idea for jumpstarting the BC economy.
For months, the business community has been calling for the provincial government to think big, be bold, and act fast in the effort to restart BC’s economy after the pandemic shutdown. Under John Horgan and the NDP, recovery has been agonizingly slow, and has fallen short of what needs to be done. BC’s unemployment rate is 10.7% — two full points higher than Quebec, and higher than Ontario, Saskatchewan and all but two other provinces.
Just before John Horgan broke his word to British Columbians and called this election last week, his government laid out a $1.5 billion economic recovery plan that was underwhelming and generally panned by most observers.
On Monday, we saw the first big idea of the 2020 BC election campaign come from Andrew Wilkinson and the BC Liberals. Wilkinson pledged to eliminate the 7% Provincial Sales Tax (PST) for an entire year, and then keep it at 3% until the economy recovers from the fallout of the pandemic.
This tax cut would be dynamic and help every British Columbian. A family with a household annual income of $90,000 would save $1,388 next year. A single person making $30,000 would save $460. Regardless of income level, all British Columbians would save money under this plan. What’s more, both left and right leaning economists have long criticized the PST for being a regressive tax that disproportionally hits lower-income people, meaning this cut will help the poor the most.
For business owners trying to pull themselves up off the mat, this tax cut would be incredibly helpful. First, consumers would have more money in their pockets to spend on local goods and services. Second, communities in eastern BC would be able to compete with Alberta, which doesn’t have a provincial sales tax. Paperwork and bureaucracy would also be reduced.
For construction companies, a PST cut will mean more money is available for investments in capital and training and hiring workers. Right now, PST is embedded into the cost of goods, supplies, equipment, and service, and passed on to the final customer.
Eliminating it for a year would be a kickstart for projects that might have been marginal at that 7% tax level. And we need every project and housing start possible to get BC’s economy moving again. Back in 2016, the Canadian Taxpayers Federation estimated that PST added at least $9,000 to a $400,000 housing project in BC. That amount has only increased in the four years since, and is far higher on more expensive homes. Earlier this year, the Business Council of BC called for the PST to be cut in half—Wilkinson’s plan is even bolder.
Wilkinson’s PST cut is one of those rare policies that helps everyone—and it’s a key reason why we all need to pay attention in this election. BC needs the best plan to revitalize our economy, attract investment, and create jobs and opportunity for communities and families in every part of our province.