Fiscal Options for Building a Prosperous British Columbia Kevin Milligan ~ Vancouver School of Economics ~ University of British Columbia

Fiscal Options for Building a Prosperous British Columbia

Commissioned paper for Business Council of British Columbia. July, 2016.
Google Scholar: entry.

Abstract:

The global economy is shifting, becoming more competitive and complex; these realities are impacting the province's tax base and adding to cost pressures on employers and governments across Canada. British Columbia is competing in a world where capital is fleeting, consumer purchases are being facilitated through technology and data, health care costs and social services expectations are rising and the provincial economy is tilting in favor of the services sector.

In this context, the BCBC commissioned an independent review of the efficiency, effectiveness and fairness of British Columbia's current tax system, and potential policy approaches to modernize the system in the context of the aforementioned economic realities. The paper notes that BC faces two key fiscal challenges: generating the government revenues needed to fund public programs and services going forward, and ensuring a healthy level of investment and business growth to sustain a strong economy.

To help shed further light on these twin challenges, Professor Milligan reviews several elements of the provincial tax system, including personal income tax, business income tax, sales tax and the carbon tax. He also highlights the trade-offs that inevitably arise in tax policy decisions. The paper's analysis indicates that the most pronounced weaknesses in the overall BC tax system lie in the design and impact of the Provincial Sales Tax (PST). To improve upon the existing PST regime, the paper outlines a number of options for reform - none of which envisage returning to the Harmonized Sales Tax system rejected by BC voters a few years ago.

Business Council of British Columbia website version here. Published version: link.


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