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

UPDATE: Sagmoen to stand trial, bail sought

Sagmoen, whose charges were split into three separate matters, has been in custody since Oct. 2017

JCI Vernon presents annual gift fair

Ninth annual Alternative Gift Fair set for Nov. 24, 10 a.m. to 2 p.m. at Vernon’s Schubert Centre

Vernon Panthers, Fulton Maroons ring up wins

Interior Senior Varsity AA Football League action

Vernon voting results official

Victor Cumming and new-old council will get to work Monday, Nov. 5

Former Kamloops sheriff caught in sex-related sting pleads guilty to lesser charge

Kevin Johnston will be sentenced on Nov. 6 for his role in communicating online with a person posing as a 14-year-old girl.

‘She’s charging. Oh God’: Mama grizzly runs at B.C. man armed with shotgun

People online were quick to question – and defend – a man’s decision to shoot a grizzly bear charging him on a Bella Coola front yard

Canada announces $20M fund for women entrepreneurs

New federal program will provide up to $100,000 for female business owners to grow their operations

Vancouver Island man claims falling ice smashed his truck windshield

Man discovered volleyball-sized chunk ice on his truck Saturday, near Nanaimo, B.C.

B.C. veteran combats PTSD in the ring and on the farm

Cam Tetrault is a valuable contributor at Quesnel’s Two Rivers Boxing Club

B.C. vegan butcher to appear on Dragons’ Den

Victoria’s Very Good Butchers will star in Nov. 29 episode

BC SPCA runs for People’s Choice award for the best PSA

The winner with the most votes will be announced at the 2018 Annual Conference takes place on Nov. 9 in Kansas City, Missouri.

Shuswap offers one-stop wellness for seniors

Salmon Arm centre for seniors with chronic conditions offers collaborate approach to health

Fast ferries from B.C. spotted in Egypt

Controversial aluminum BC Ferries vessels ’big white elephants covered in dust,’ eyewitness says

Canadian troops, families take shelter in hotel after Florida hurricane

Most of the Canadians were evacuated from the military base before Hurricane Michael

Most Read