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

Kelowna RCMP search for missing senior

Cathy Wilson has dementia and was seen leaving her care facility in Rutland

Former Princeton councillor petitions against mixed-use trail in town

Jerome Tjerkstra lobbies against mixed-use trail in town limits

Come celebrate Canada’s Day in Princeton

Golf, parades and movies in the park are on the schedule

Princeton beautification project stalled

The city says new statues and gateways won’t arrive by Canada’s Day

VIDEO: Driver doing laps in busy Vancouver intersections nets charges

Toyota Camry spotted doing laps in intersection, driving towards pedestrians

Every situation is different, jurors hear at coroners inquest into Oak Bay teen’s overdose death

Pediatrician says involuntary treatment necessary following overdose, opioid use

RCMP across Canada to soon unionize, according to B.C. mayor

A spokeswoman for RCMP headquarters in Ottawa says it’s not yet a done deal

Penticton baby suffers injuries from fall

Emergency crews responded to a report of a fall at a residence at 4 p.m. on June 26

Missing and murdered Indigenous women remembered at Okanagan rally

Red Dress campaign honours the memory of missing and murdered Indigenous women across Canada

Explicit sex-ed guide for adults mistakenly given to Creston elementary students

The booklet clearly states online and inside that the guide contains sexually explicit information

Driver has $240K McLaren impounded minutes after buying it in West Vancouver

Officers clocked the car travelling at 160 km/h along Highway 1 in a 90 km/h zone

Kelowna’s homeless population doesn’t have much hope of finding a bed at a shelter

Central Okanagan Journey Home Society says 300 people waitlisted for supportive housing

Most Read