Finance Minister Carole James left big tax exemptions like the home owners grant and restaurant meals alone in her first full budget. Preparations are underway for the 2019 budget. (Black Press files)

ANALYSIS: Tax breaks costing B.C. treasury $7 billion a year

Home owners grant now goes to people with $1.65M houses

Why does B.C. continue to give property tax breaks for owners of million-dollar homes and waive the sales tax for high-end bicycles and restaurant meals? And who pays to make up the lost revenue?

You hear a lot about government spending going up or down, but politically popular tax breaks accumulate over the years with little discussion of their impact. As of last year, the combined cost to the B.C. treasury was more than $7 billion annually, Auditor General Carole Bellringer notes in a new report.

Economists call them “tax expenditures,” to emphasize that they are in effect spending programs. According to the current B.C. budget, the biggest one is the provincial sales tax exemption for food, which includes restaurant meals as well as grocery store food items. That is foregone revenue totalling $1.18 billion.

The only other province that exempts restaurant meals from sales tax is Alberta, which has no provincial sales tax.

B.C.’s second biggest tax break, budgeted at $809 million this year, is the B.C. Home Owners Grant. Introduced in 1957 by then-premier W.A.C. Bennett as a populist measure to relieve rising home prices, the grant has grown along with housing prices. The most recent adjustment to eligibility for the grant raised it to homes up to $1.65 million, up from $1.6 million.

The grant is more controversial this year because Premier John Horgan campaigned on a promise to provide a renters grant of $400 a year, arguing that renters should get a break as well as homeowners. But the renter rebate has not been delivered, because it is opposed by B.C. Green Party leader Andrew Weaver and he holds the balance of power in the minority provincial government.

Among the home owner grant critics is Simon Fraser University economist Marvin Shaffer, who has called it “a crassly political, poorly designed grant program” that goes to more than 90 per cent of homeowners via a complicated regional application system.

His fellow SFU economist Rhys Kesselman has argued for a “progressive annual property surtax on higher-value homes” that exempts homes below $1 million in value.

B.C. dropped the sales tax on the food portion of restaurant bills in 2013 when the harmonized sales tax was scrapped. All other provinces except Alberta, which has no sales tax, charge either HST or provincial sales tax on restaurant meals, with the highest being 15 per cent HST in Nova Scotia.

RELATED: Extend sales tax to soft drinks, advisors urge

Bellringer isn’t recommending changes to the home owners grant or other tax expenditures. Instead she suggests that after 25 years, reporting of these policies should be improved to better show their effects on the economy.


@tomfletcherbc
tfletcher@blackpress.ca

Like us on Facebook and follow us on Twitter.

Just Posted

Pitt Meadows fire chief retires

Don Jolley bows out amid city hiring two full-time firefighters.

Golden Ears Writers present holiday tales

The Golden Ears Writers are performing a holiday reading at The ACT on Dec. 18.

Letter: ‘MRSS wrestling saved me’

Alumni asks school board to reconsider decision on Mount Crescent.

Maple Ridge dancers prepare to perform in downtown Vancouver

Amelia and Hannah-Jane Clutchey are dancing in the upcoming production of “Mixed Nuts.”

Families come out for Christmas in Pitt Meadows

Community celebration moved indoors this year, crowds approve

Federal government plans examination of coerced sterilization

The Liberals have been pressed for a rapid response to recent reports on the sterilizations

Huitema, Cornelius named 2018 Canadian Youth International Players of the Year

Huitema was captain of Canada’s fourth-place team at this year’s FIFA U-17 Women’s World Cup

Canada not slowing emissions from oil and gas: environmental groups

New report released at the United Nations climate talks in Poland

Liberal Party moves Trudeau fundraiser from military base

The fundraiser is scheduled for Dec. 19, with tickets costing up to $400

Pipeline protesters arrested at B.C. university

Three protesters were arrested after TRU property allegedly vandalized with red paint

Family calls for change after death of B.C. man at St. Paul’s Hospital

Hospital beds for patients with both medical and mental-health issues are ‘very limited’: coroner

Goodale to ‘examine’ transfer of Rafferty to medium-security prison

Michael Rafferty was sentenced to life in prison in 2012 in the kidnapping, sexual assault and first-degree murder of Tori Stafford

‘Abhorrent’ condition of autistic B.C. boy shows flaws in care system: report

‘Charlie’ was underweight and ‘covered in feces’ when he was removed from his mom’s care

Most Read