Finance Minister Katrine Conroy is pushing British Columbia deeper and deeper into unsustainable debt, with high taxes and no plans to balance the budget.
This year’s provincial deficit is a record-setting $7.9 billion. That’s the largest deficit in the province’s history, and far higher than was ever recorded during the COVID-19 pandemic.
After years of chronic deficits, interest charges are rising and gobbling up a large amount of taxpayer cash. This year alone, taxpayers are on the hook for $4.1 billion in debt interest payments. To put that eye-watering number into context, that’s roughly $820 per British Columbian this year alone. Over the next three years, interest on debt will cost taxpayers $14.6 billion in total.
The interest on the B.C.’s government debt is more money than the government collects in the carbon and motor fuels tax combined. And interest payments are so high compared with the spending in most ministries that B.C.’s Ministry of Debt Interest is now the fourth-largest ministry in government.
Surely British Columbians would rather keep that money at home, instead of sending billions to bond managers on Bay Street. British Columbians desperately need tax relief. Instead, taxpayers are seeing more and more money spent on debt interest.
Conroy and Premier David Eby also have not voiced plans to balance the budget. Instead, more debt will be added, which in turn means more in interest payments. Over the next three years, government debt is expected to increase by nearly $42 billion, from $123 billion this year to $165 billion in 2026-27.
The province’s debt-to-revenue ratio is also set to soar from 95.1 per cent in 2023-24 to a staggering 151.2 per cent by 2026-27.
At the same time, population growth is far outpacing economic growth. Provincial population growth was around three per cent last year, roughly double the modest 1.6-per-cent growth in employment, and well above a small 0.8-per-cent rise in retail sales. Population growth outpacing employment means there aren’t enough jobs being created to make sure B.C.’s newest residents can find work.
The province is also hiking taxes on fuel. The first provincial carbon tax is going up to $0.17 per litre, which will now add $11 to the cost of filling up a small sedan. Only 24 per cent of British Columbians support a carbon tax, while about half somewhat or strongly oppose it. And a poll conducted last year by Innovative Research Group shows that only seven per cent of British Columbians want the carbon tax to keep rising.
If there is a silver lining here, it’s the increased Employer Health Tax (EHT) threshold. The EHT threshold has been doubled from $500,000 to $1 million of payroll. That’s a good move that will save small businesses money.
But, the bottom line is that the province needs to put down the taxpayer credit card, pick up a pair of scissors and restore some fiscal responsibility to B.C.
Carson Binda is the British Columbia director for the Canadian Taxpayers Federation.
