BC Liberal tax cut proposal a $7.5 billion revenue hit

Canadian Taxpayers Federation endorses PST elimination for one year, but acknowledges challenges to balance to the budget

An election campaign promise by the BC Liberals to eliminate the Provincial Sales Tax (PST) for a year has earned the endorsement of the Canadian Taxpayers Federation (CTF).

And the CTF hopes both the NDP and Green Party will opt to meet that challenge announced last week by Liberal leader Andrew Wilkinson.

“We pay the PST on everything from used cars to toilet paper so this would save everyone a lot of money,” said Kris Sims, B.C. director of the Canadian Taxpayers Federation.

“The best way to save people money is for governments to stop taking so much of it in the first place.”

The PST is a seven per cent sales tax applied to nearly every item sold in B.C. with the exception of food. The zero tax pledge also extends to liquor, which carries a higher 10 per cent PST.

In the 2019-20 budget year, the PST generated more than $7.5 billion in revenue for the provincial government.

“Why we are excited about this tax cut is it affects everyone the same, both the lower income person and the wealthy…it keeps money in people’s pockets to spend,” Sims said.

“And it could be a tremendous benefit to restaurant owners, who rely on alcohol sales on average for up to 30 per cent of their revenue. A 10 per cent tax cut could make or break them in a given year.”

Sims acknowledged the tax cut will raise issues of how to make up the loss of $7.5 billion in the provincial budget.

“How to make up that difference is what the Liberals would have to figure out. They will have to go through the budget line item by line item to assess their wants and needs,” she said, noting that 60 per cent of the provincial budget is taken up by health and education related costs.

“That would be a challenge but it would help juice the economy. We are not in favour of the PST. It should be zero. Governments should rely on income tax to generate revenue and that increases when you increase job creation.”

To make her argument, Sims cites how a recent study revealed a lack of energy pipeline capacity expansion has cost the federal government $13 billion of income tax revenue, and how B.C. is losing out on PST when British Columbians travel to Alberta, where there is no PST, to buy larger cost items.

“It is better to keep more of our own money rather than funneling through provincial or federal government relief programs that can be tailored or niched, and miss out people who need the help.”

In response, the BC NDP dismissed the proposal, noting groceries, rent, car insurance, prescription medication, school supplies, children’s clothing and child care are already exempt from the PST

BC Green leader Sonia Furstenau said the PST proposal shows a lack of imagination by the BC Liberals.

“This old-school style of economics is not what B.C. needs to recover. We need to target our recovery efforts to the economic sectors that need it most,” Furstenau said in a statement.

BC politicsBC Votes 2020taxes

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