July 24, 2002

Capital Spending Down in BC

It appears that not only do income tax cuts not pay for themselves, but the tax cuts made by the Campbell government for the purpose of stimulating investment have yet to produce any positive results.

Statistics Canada has reported that "Total capital spending in Canada on plant, equipment and housing should surpass $200 billion in 2002, up sharply from a February measurement of about $194.0 billion, according to revised intentions of public and private investment." As shown in the Statistics Canada chart British Columbia joins Alberta in not keeping up with the rest of Canada. The preliminary actual figures for BC in 2001 are $13,712.8 million for construction and $8,812.6 for machinery and equipment. Statistics Canada's February survey of investment intentions for 2002 estimated virtually no growth in construction and a drop of $280 million in investment in machinery and equipment. The revised estimate of investment intentions was constructed from a survey taken between April and June. It shows an increase of $200 million (1.5%) for construction in BC but a decrease of $290 million (-3.3%) for investment in machinery and equipment.

The drop in capital spending in British Columbia is despite the elimination of the sales tax for machinery and equipment and the capital tax (reduced last year with total elimination effective September 1, 2002).