Chapter 4 Blog

BC’s grand budget plans have financial teeth, says Finance Minister

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The Finance Minister, Carole Taylor, propose that BC has the cash and willpower to cut taxes, clean up the environment and ease the housing-cost burden felt by the province. The Government has plans to cut down on greenhouse emission gas by one third by 2020. Even though we don’t know how much this plan would cost the government. However, we know that the government is planning to use $2 billion for housing initiatives, 10% personal income tax cut, and 20% increase in welfare rates. There were government budgets that include plans for helping children, families, and seniors. Carole Taylor says that the government decided what was best for the citizens of BC is a tax cut to reduce their burden and stress from the high priced housing. One of the main reasons of the tax cut was due to the price jump of 24% across the province. The government currently is trying to find a policy for the benefits of every BC citizens. For the 10% tax cut, it applies to citizens that earn up to $108,000 per year. Carole Taylor also said that she couldn’t guarantee that there will be another tax cut in the year 2009. BC competition Council recommends that the government should give a tax cut for people that earn up to $150,000 but the government has to think about it due to the major decrease in revenue that this action will cause. A public policy expert says this is how modern governments are surviving in the new age of surplus budgets. BC government had projected a $400 million surplus t his year and over the year of 2006 – 2007, a $2.8 billion surplus is expected. The government’s goal is to putting more money into housing and continuing with their environmental dreams. Carole Taylor mentioned once again that their financial plans are based on reality because it is based on solid data. The government also said they are open for any criticism.

Relations to Chapter 4 “Taxation”

Taxation is something that none of us can evade. A country’s revenue is mainly from taxes. When the government decreases the tax rate, it means that they will lose a lot of revenue and the province might be in the risk of going into debt. When the government propose that they will cut 10% personal income tax for people who annually earn less than $108,000. When we look at the census for the year 2002, the average income of a person in Vancouver would earn $44,897. From that, we see that most people in Vancouver don’t earn over $108,000. This tax cut will relief the burden on most of the people in Vancouver, but the taxes collected in Vancouver would also drop. Now imagine what this tax reduction for everyone in BC. In the year 2002 from the statistic, it shows that an average income for a person is $43,096 and the total income is 86 million dollar. The total tax paid for all those incomes was 17.3%, while 12.2% went to Federal and the other 5.1% went to provincial, which means a total of $14.62 billion of taxes that is collected, while $10.492 billion went to Federal and $4.386 billion went to provincial. With that money collected from us tax payers; BC also has to use the money to pay off their debt and also fund health care, education, social programs, and many other things. With their newest financial plans, they are having the means of decreasing tax, while increasing spending. This is economically unwise because when they increase spending, they actually need more money; instead they decrease tax, which means they will obtain less money. Some of the solutions that the government can do and also please the citizen are to keep the tax rate at what it is right now, but increase another tax to balance out their income.