A Busy Time for the BC Government

With the release of the budget, February is always a busy time in provincial politics, but this year there's even BB BB more going on in Victoria that should be of interest to CAs: This year, there's an opportunity to participate in the government's PST review; there are new recommendations from the Select Standing Committee on Finance and Government Services that should give a hint about possible items for the upcoming budget; and, finally, there is a report on the government's financial statements from EC's Auditor General Wayne Strelioff, FCA.

PST review

Late in 2005, the Ministry of Small Business and Revenue announced a PST review. The purpose of this review will be to develop revenue-neutral options that will streamline, simplify, and enhance fairness in the administration of the provincial sales tax.

During the review process, the Ministry is inviting presentations from the public at consultation meetings around the province, and written submissions from those unable to attend face-to-face meetings. Meetings have already been completed in Prince George, Kelowna, and Cranbrook, with Mike Boven, CA, making a presentation to the committee in Kelowna, and Don Simpson, CA, presenting in Cranbrook.

At press time, other dates had not yet been set, but meetings were being planned for Smithers, Vancouver, Quesnel, Williams Lake, Courtenay, Nanaimo, Surrey, Abbottsford, Kamloops, Penticton, Fort St. John, Victoria, and Dawson Creek. We encourage you to attend a meeting in your area and have your say on streamlining the PST. If you live outside of these communities or are simply unable to attend a local meeting, you can also submit your thoughts in writing. For more details on the review process, dates of regional meetings, and information on where to send your submission, visit the Ministry's website at www.sbr.gov.bc.ca/PSTReview/index.htm.

By the time you read this magazine, the ICABC will have made a formal written submission to the committee, and a copy of this submission will have been posted on our website at www.ica.bc.ca/kb.php3?catid=203 under "Government Submissions."

We encourage you to make a formal submission as well. Submissions should address: 1) your key provincial sales tax concerns; 2) how these concerns can be fixed; and 3) how solutions can remain revenue-neutral.

Submissions will be accepted until May 1, 2006.

Making recommendations

In November 2005, the Select Standing Committee on Finance and Government Services released its report on the 2006 Budget Consultation Process. The report contained a number of recommendations to the Minister of Finance, including many stemming from concerns that had been expressed by CAs around the province.

The following are just a few of the recommendations that either came directly from CAs or may be of interest to CAs:

Tax reductions

The Committee recommended that the government:

* Continue to monitor provincial taxation rates to ensure that taxation levels remain competitive vis-a-vis competing jurisdictions in North America; and

* Consider the gradual reduction of the Provincial Sales Tax (Social Service Tax) to 6% based on current fiscal projections, and continue to pursue the provincial sales tax streamlining initiative in an effort to provide clear, uncomplicated rules concerning PST collection, while simultaneously reducing the administrative costs to small business.

New or expanded programs and services

The Committee recommended that the government:

* Consider developing both apprenticeship training and co-operative education tax credits to assist employers with the costs associated with skilled trades and cooperative education programs;

* Review the per/student funding allocation for BC's colleges and universities to ensure that new post-secondary education spaces-including those for skilled trades-are sufficiently funded;

* Consider eliminating fees charged to students for adult basic education; and

* Examine the total costs associated with post-secondary education for students, including fees, grant programs, housing, and textbooks.

Paying down the debt

The Committee recommended that the government examine the viability of formalizing a long-term debt-management plan.

Contingency Funds and Forecast Allowances

The Committee recommended that the government continue to incorporate a healthy contingency fund and forecast allowance to keep the budget balanced.

Editor: A review of the provincial budget, along with the ICABC's commentary, will be featured in the April issue.

Monitoring the government's finances

In a November 2005 report entitled Monitoring the Government's Finances (2005/06: Report #6), Auditor General Wayne Strelioff, FCA, encourages the BC government to continue strengthening how it reports on its financial status.

"I am asking the government to pick up where it left off in the prior year in the development of its financial statement discussion and analysis in the Public Accounts," says Strelioff. "I am also asking that the discussion include more background on decisions, trends, and indicators that provide a context to help Legislators and the citizens of British Columbia more fully understand the financial position and performance of government."

As in previous years, the key recommendation of this latest report is that the government expand its financial statement discussion and analysis in the Public Accounts; this would require the government to adopt the Indicators of Government Financial Condition (supported by the CICA) and other relevant economic and contextual background information in explaining its financial position and performance.

In Monitoring the Government's Finances, Strelioff provides a nine-year trend for several key financial and economic indicators that he believes should supplement the government's financial statements. He also compares EC's financial condition to that of other Canadian jurisdictions, noting that the BC government's overall financial condition improved in fiscal 2004/05, and is strong compared to most Canadian provinces. He reports that indicators of the provincial government's financial condition reveal a more sustainable and flexible financial position than in 2003/04, but also cautions about financial vulnerability, pointing out the BC government's increased reliance on transfer payments from the federal government.

The report is available for download from the Office of the Auditor General of BC website at www.bcauditor.com, under "Reports."

Meeting with Attorney Genera Wally Oppal

On Thursday, December 8th, Richard Rees, FCA, the CEO of the ICABC, met with Wally Oppal to discuss the Institute's position that BC should modify its joint and several liability legislation, particularly as more and more states in the US adopt proportionate liability or modified joint and several. The Minister acknowledged the issue, and agreed that changes had occurred in other jurisdictions since the government last examined the issue. We will continue to talk to the Minister about the need for further changes in BC.

Meeting with Minister of Small Business and Revenue Rick Thorpe

The following day, on Friday, December 9th, Rees met with Rick Thorpe to discuss the Institute's suggestion that the government study sales tax harmonization as part of their PST review. At this meeting, the Minister stressed that the government is looking to simplify the PST in ways that are revenue-neutral. He asked that members of the Institute attend the various PST review panel meetings around the province in the coming months, and encourage their clients to attend as well.