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VANCOUVER: A Canadian Taxpayers Federation's (CTF) report card released today on the fiscal performance of British Columbia's Liberal government addresses five items: budgets, taxation, spending, debt and corporate welfare.

"Legislated balanced budgets and across the board personal income tax cuts are examples of responsible government in action," said Maureen Bader, BC Director of the CTF. "Unfortunately, the Liberal government's spending increases, forecasts for debt increases, and business handout programs mean they will be challenged to continue delivering the economic gains we've experienced so far."

Balanced Budgets B+

The Balanced Budget and Ministerial Accountability Act prevents the government from forecasting a budget deficit for a fiscal year. This legislation does not mean B.C. could not have a budget deficit. Nevertheless, as a result of higher than expected tax revenues, B.C. has had a budget surplus since 2004/05.

"Balanced budget legislation, even if only against forecasting a budget deficit, saves the Liberals from falling farther down the grade scale." continued Bader.

Taxation B+

Across the board personal income tax relief shows a commitment to tax reform and tax honesty. Total revenue from personal income tax has increased. Low tax rates create strong incentives to work and invest. Tax reduction efforts brings high marks, however B.C.'s tax system is still confusing and complicated. This grade could improve with tax reform leading to a lower, simpler and flatter income tax system.

"Even though personal tax rates have fallen, revenues from income tax has gone up in each of the past four years," said Bader. "This shows that it is not high tax rates, but a growing economy, that increases tax revenues."

Spending C

The Liberal's first term shows spending moderation is possible. Spending increased by an average of 1.94% per year. Spending ballooned at the start of the Liberal's second term to an average of 5.6% per year between 2005 and 2007. Second term spending is out of line with the CPI, at about 2% per year and population growth, at about 1% per year. More than two-thirds of spending goes to health and education.

"With continued long waiting lists and declining enrollment, it is obvious that these two sectors need reform, not more money," said Bader. The Liberal government has not been immune to the spending disease that seems to affect most second-term governments."

Debt C-

The Liberal government got B.C.'s debt back to 2001 levels in 2006. Nevertheless, big public debt servicing charges, at $2.2 billion in 2006 - or $6-million each day will likely rise because of a forecasted increase in the public debt. Alberta, now debt free, uses all its tax revenue for programs and infrastructure. Money now spent on interest in B.C. could also fund infrastructure, programs, and further tax reductions.

"The Liberal government must stop engaging in debt reduction by accident and start a program of debt elimination by design," said Bader. "B.C. needs a legislated debt reduction plan, just like a legislated balanced budget plan, to force the government to get serious about debt reduction."

Corporate Welfare D

The Liberal government's plan to eliminate corporate welfare started off well with the elimination of all government subsidy programs that gave an unfair advantage to individual businesses. The second-term Liberal government is now channeling funds to industries such as tourism and the arts. More significantly, it began creating a set of complicated targeted tax cuts to industries ranging from film to venture capital funds, in the hope of diversifying the economy into non-resource activities.

"Government's have yet to come up with a spending program more wasteful than corporate welfare," said Bader. "As we have seen often in the past, governments are not good at picking winners, but losers are very good at picking governments. This creates waste, higher taxes and higher debt."

Click here for a complete copy of the report.