B.C.’s economy is in relatively good shape compared to other provinces as the NDP government prepares for a year where the COVID-19 pandemic is easing, the B.C. Business Council says in a pre-budget analysis.
But the tax environment is affecting competitiveness, working against the provincial government’s push to move B.C. to a more high-tech economy with hundreds of millions in innovation, clean energy and skills training spending ahead.
Finance Minister Selina Robinson is preparing to release B.C.’s 2022-23 budget on Feb. 22. A forecast deficit for the current year has shrunk from nearly $10 billion to $1.7 billion, including large contingency funds, but much of that is likely to be expended this year on massive reconstruction of flood-damaged highways and recovery of Lytton, Merritt and the Eastern Fraser Valley.
The skills shortage is significant, particularly in senior management roles where top executives are faced with an personal income tax rate of more than 53 per cent, BCBC chief economist Ken Peacock said Friday. And B.C. competes with the U.S. Pacific Northwest, where Washington has no state income tax, as it hopes for more investment from technology giants such as Amazon and Microsoft.
B.C. already has Canada’s highest offered wages, but attracting young people to the province to replace retiring baby boomers and build new industry is held back by high income taxes and housing costs, Peacock said Feb. 18. Despite the wages, B.C. has the highest number of job vacancies among provinces.
— Tom Fletcher (@tomfletcherbc) February 18, 2022
As Premier John Horgan and Jobs Minister Ravi Kahlon said this week in updating the province’s economic plan, resource industry exports continue to be key to the province’s future growth. B.C. has the highest carbon tax in Canada, without protection for exporting industries as other jurisdictions have, and measured as a share of gross domestic product, B.C. and Canada’s exports are at the same level as in 1980.
“It needs to change,” Peacock said of industrial carbon costs. “It’s becoming very onerous.”
B.C.’s clean energy transition requires copper and other minerals. Last January B.C. cabinet ministers were reminded that it takes an average of 13 years to approve a new mine in the province.
“The regulatory environment and permitting absolutely have to be addressed,” Peacock said.