December 16, 2002

Combined Tax Burden examined by the BC Progress Board

On July 18, 2001 Premier Campbell appointed the "BC Progress Board". Campbell said, "The B.C. Progress Board will provide a new level of accountability for our government by establishing specific economic goals for the tax, regulatory and fiscal reforms we undertake." The news release also announced that "the independent panel will be chaired by David Emerson, CEO of Canfor, and will comprise 15 other senior business executives."

The Progress Board has its offices at 730 Canada Place, immediately next door to the Vancouver Cabinet Office, the site of the Premier's Office in Vancouver. The Board may be independent but it is close at hand. The government seems to be hiding the Board's work. Despite many new graphics and links at http://www.gov.bc.ca, including a graphic proclaiming "Positive Economic Indicators", there is no top level link from the government's website to the website for the BC Progress Board, http://www.bcprogressboard.com.

BC's Board is a scaled down version, some would say more of a special interest version, of the Oregon Progress Board, http://www.econ.state.or.us. The Oregon Board was created by the state legislature in 1989 to track progress on implementation of the state's strategic plan. It uses 92 criteria that include social, economic and environmental health indicators. The Board's website says that "The ten-member panel, chaired by the governor, is made up of citizen leaders and reflects the state's social, ethnic and political diversity."

No one will accuse Premier Campbell's Board of reflecting BC's diversity but it should not be dismissed merely because it primarily reflects business interests. Its report may need to be supplemented with additional indicators but its first two reports demonstrate a skilled presentation of important data for measuring the effectiveness of government policy. The Board's presentation can be criticized for an apparent political bias in choosing fiscal year 1992/93 as the starting point for most of its comparisons. The structural change the BC economy is experiencing started in the early 1980s. The Progress Board's data start a decade later, nevertheless, it does a competent job of presenting some information within that limited time span. The following graph is an example of what one can find in the board's second report.

The solid black line shows BC relative to Alberta, Ontario and Quebec. The "combined tax burden" from local and provincial sources includes income taxes, consumption taxes, health insurance premiums, contributions to social insurance plans and other taxes including payroll taxes, fees for motor vehicle licenses, natural resources taxes and licenses and other miscellaneous taxes. The combined tax burden is lower for BC than Ontario and Quebec in every year from 1992/93 through 2001/02. From 1998/99 through 2001/92 the BC and Alberta "burdens" are almost equal.

The BC Progress Board report also includes the following graph which compares BC to the average of all Canadian provinces (labeled "provincial average"). Notice how little difference the "dramatic" Campbell tax cuts made to the advantage BC already enjoyed. Campbell's cuts changed who pays, with the biggest breaks going to high income earners, but it did little to change the average consolidated tax burden.

The Board supplemented the above comparisons with data from nearby US states without adjusting for the burden they must bear for private health insurance premiums (included in Canadian taxes). It also reported on top marginal rates as a separate indicator from the "consolidated tax burden" - thereby reflecting particular concern for high income earners.

The "consolidated tax" information appears inconsistent with the high tax spin put out by Gordon Campbell during the last election campaign, and it appears inconsistent with the justification for the radical tax cuts that have put BC into financial chaos. Page 42 of the Board's report says:

Are these data why you won't find an easy link to the BC Progress Board on the government website, or is it because the Board ranked the first year performance of the Campbell government as weak to middling on many key indicators?