B.C.'s Finance Minister wants to know what the government's priorities should be for the 2008 budget. The Canadian Taxpayers Federation has some advice: legislated debt reduction should be the number one priority.

To be sure, recent surpluses have allowed the government to reduce the debt. But it has been debt reduction by accident rather than design. In fact, the government is forecasting B.C.'s debt to increase by 20%, to almost $40 billion, by 2009/10. It is time to reorient priorities and create a legislated debt reduction plan.

There are two important considerations. First, the economy is booming, producing surpluses that provide a tremendous opportunity to pay down debt. If we don't do it now, when would we do it The time is right!

Second, as our neighbouring province has taught us, any meaningful debt reduction plan is doomed to the vagaries of political machination in the absence of law. Alberta legislated a debt reduction plan in 1995, stipulating that the province's entire surplus would go to debt reduction. Predictably, the government came under tremendous pressure to abandon debt repayment and spend the surplus dollars. And while the government caved in part, a new Act passed in 1999 still required 75 per cent of all surplus dollars be put toward debt repayment. By 2004, the debt was essentially gone.

The law kept debt reduction on track and importantly, provided focus for taxpayers and politicians alike. The legislation gave politicians a shield to defend their debt reduction policy; a way to say no to the predictable chorus of spending interests that arrived at their door with a myriad of suggestions on how to spend other peoples' money.

Reducing debt leaves money available for other priorities. Alberta's interest payments once absorbed 12% of its tax revenues. Today, 100% of Alberta's provincial tax revenues are available for roads, bridges, policing, schools, and hospitals. In B.C., we currently use about 7% of provincial tax revenues to fund the debt, to the tune of about $6 million dollars per day. Think about that, $6-million dollars a day that could go into health care, environmental protection, infrastructure development, or better yet, left in the pockets of taxpayers!

The Canadian Taxpayers Federation is specifically proposing the government adopt a legislated debt reduction plan that uses 2.5% of own source revenue to pay down the debt. Currently, the government pays half the forecasted surplus to debt reduction, but the forecasted surplus is low-balled each budget, and what do you know The government actually expects the debt to rise over the next three years. Revenues are not subject to the same type of fiscal illusion. Tying debt reduction to revenues should give us real debt reduction in the future.

The government has brought B.C.'s debt back down to 2001 levels, and made good progress on tax reductions, but confused budgeting priorities could leave a legacy of debt to future generations. The 2008 budget consultation gives all taxpayers an opportunity to voice their opinion on where priorities should be. The timing for meaningful - and legislated -- debt reduction has never been better.

The deadline for submissions to the Budget Consultation Panel is Friday, October 19, 2007. Call 1-877-428-8337 to find out how to make your voice heard.