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

Kent to weigh in on ride-sharing policies

The district will be submitting comments to the province on what ride sharing should look like

Chilliwack prolific offender wanted yet again

B.C.-wide warrant issued for David Allen Geoghegan

One man, two women charged with stolen pickup downtown Chilliwack

None of the three have criminal history in B.C.

Enrolment, EA increases make for no surprises in updated school district budget

The budget reflects changes that were made after recieving provincial funds in December

Agassiz Community Gardens hoping to find new home at old McCaffrey school

The society has been looking for a new location since its previous gardens were sold in October

Self serve doggy-wash poised to change dog grooming industry

Add money, start spraying to wash dog in the K9000

No winning ticket in $10 million Lotto Max jackpot

No win in Friday night’s draw means the next Lotto Max draw will be approximately $17 million

Scientists ID another possible threat to orcas: pink salmon

For two decades, significantly more of the whales have died in even-numbered years than in odd years

Burnaby byelection turmoil sparks debate about identity issues in politics

The Liberals still have not said whether they plan to replace Wang, who stepped aside Wednesday

B.C. woman planned to donate a kidney to her husband, then found out she has cancer

Richard Stuart needs a kidney, his wife Tracy has been diagnosed with cancer

15 to 20 cm of snow to fall on Coquihalla

Kelowna - A snowfall warning is in effect for the highway from Hope to Merritt

Rookie Demko backstops Canucks to 4-3 win over Sabres

Young Vancouver goalie makes 36 saves to turn away Buffalo

Charges upgraded against mother of murdered B.C. girl

Kerryann Lewis now faces first- rather than second-degree murder in the death of Aaliyah Rosa.

UPDATE: Injured firefighter in stable condition

Kelowna fire crews responded to a blaze at Pope’sGallery of BC Art & Photography on Friday

Most Read