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Economy

British Columbia’s finances go from bad to worse during Eby’s first full year

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From the Fraser Institute

By Tegan Hill and Grady Munro

You might be able to justify higher spending if it improved programs and services for British Columbians—but it hasn’t. In fact, despite substantial increases in spending in recent years, the province’s health-care wait times have increased and student test scores have declined.

The recent move by BC United to suspend its campaign, essentially clearing the way for a two-party race in this fall’s provincial election, made headlines across British Columbia. But another recent event, which failed to garner much media attention, included some jaw-dropping numbers that will impact provincial finances for years to come.

Last week, the Eby government recently released its year-end report for the 2023/24 fiscal year—this government’s first full year in office. Unfortunately for British Columbians, provincial finances went from bad to worse as the government ran a larger-than-projected budget deficit and accumulated significant debt.

First, let’s take a closer look at the government’s budget—David Eby’s first official budget as premier—which projected a $4.2 billion operating deficit for the 2023/24 fiscal year (the government expected to spend $81.2 billion while only bringing in $77.7 billion in total revenues). For context, in its last budget the Horgan government had also planned to run a $4.2 billion deficit in 2023/24, but expected to take in $7.5 billion less in revenues. Put differently, the Eby government could have ran a budget surplus if it stuck to Horgan’s spending plan. Instead, the Eby government chose to spend away that $7.5 billion.

Given that per-person (inflation-adjusted) program spending was already at its highest level since 1965 (the earliest year of available data) under the Horgan government in 2021 (even excluding COVID-related spending), that’s a massive influx of new spending.

Now, the year-end report shows that the Eby government increased spending even further—$3.5 billion more than its original plan in the 2023 budget. Overall, it ran a $5.0 billion operating deficit in 2023/24, despite once again taking in more revenues ($1.9 billion) than it had originally planned. Again, the government chose to spend away every single dollar of extra revenue, and then some.

And the eye-popping deficit is only part of the picture as longer-term spending on things such as schools, highways and bridges, isn’t included. After accounting for long-term spending on capital projects, the B.C. government accumulated $11.3 billion in net debt (total debt minus financial assets) in a single year from 2022/23 to 2023/24. Government debt must ultimately be financed by taxpayers who spent $3.3 billion in debt interest payments in 2023/24. That’s money no longer available for programs such as health care or education.

According to the Eby government, “with a slower world economy and a growing population, we cannot afford to have a deficit of services. When we provide the services and support people need to have a good life, it makes our economy stronger and more resilient.”

You might be able to justify higher spending if it improved programs and services for British Columbians—but it hasn’t. In fact, despite substantial increases in spending in recent years, the province’s health-care wait times have increased and student test scores have declined. Put differently, according to key indicators, B.C.’s performance on health care and education—the two largest areas of government spending—have worsened despite higher spending.

Higher spending also hasn’t paid off for the B.C. economy, which is stagnating. The province’s per-person GDP, a broad measure of living standards, is expected to be lower this year than in 2018. And the Eby government expects negative growth in per-person GDP this fiscal year.

Unfortunately for British Columbians, the latest year-end report on B.C.’s finances shows the Eby government took a bad fiscal situation and made it worse with higher spending and an even larger budget deficit. The next government, whoever that may be, must deal will this fiscal mess.

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Trump eyes end of capital gains tax in 2025

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Quick Hit:

In a historic announcement that rattled markets and reignited debate over tax policy, President Donald Trump revealed plans to eliminate the capital gains tax starting in 2025. The unprecedented move would allow Americans to retain all profits from asset sales—whether in stocks, real estate, or other investments. Supporters tout it as a bold pro-growth measure, while critics warn it may cause budget strain and market instability.

Key Details:

  • President Trump announced the elimination of capital gains tax effective 2025, describing it as a move to reward success and promote wealth-building.

  • Currently, capital gains are taxed at rates up to 20%, with additional surcharges for high earners.

  • The announcement caused a major rally across financial markets, though critics claim the change favors the wealthy and could disrupt the economy.

Diving Deeper:

At a press conference on Monday, President Trump laid out a sweeping proposal to eliminate the capital gains tax in its entirety, calling it a “long-overdue correction” to what he described as a punitive tax on prosperity. “Why should you be punished for building wealth?” he asked. “This is America—we reward success.” If enacted, the change would allow investors to retain 100% of profits from the sale of assets such as stocks, homes, and businesses, with zero tax liability.

This proposal marks a sharp departure from decades of entrenched U.S. tax policy. Currently, long-term capital gains are taxed at rates ranging from 0% to 20%, with potential surcharges including the 3.8% Net Investment Income Tax for high earners. Trump’s plan would zero out those liabilities entirely starting in the 2025 tax year.

Conservative economists and market analysts have lauded the move as potentially the most transformative supply-side reform since the Reagan era. They argue that removing the tax will unshackle trillions of dollars currently locked in unrealized gains, spurring investment, entrepreneurship, and broader economic dynamism. “This is a game-changer,” said one pro-growth advocate. “It sends a clear message that America is back to being the most investment-friendly nation on Earth.”

Predictably, left-wing critics erupted. One Democratic senator labeled the measure a “grenade” that would detonate the federal budget and widen the wealth gap. Others warned of asset bubbles and increased volatility as investors rush to dump assets ahead of the reform’s implementation. These concerns, however, do not seem to have spooked the markets—at least not yet.

The Dow Jones Industrial Average jumped nearly 600 points following the announcement, while cryptocurrencies surged on expectations of tax-free gains. Real estate portals and trading platforms like Robinhood and E*TRADE saw surges in activity as users began strategizing around the policy’s timing. Online, the announcement triggered a wave of memes and commentary. The hashtag #NoCapGains began trending on X (formerly Twitter), with some calling it a “wealth liberation act” and others denouncing it as “Robin Hood in reverse.”

Legislation to formalize the proposal is expected to hit Congress within weeks. While Republicans have largely expressed support, Democrats are preparing for a fierce battle. It’s unclear whether some establishment Republicans—many of whom have been resistant to bold reform under Trump—will help move the bill forward or slow-walk it in favor of more moderate compromises.

Until the law is officially passed, financial advisors are urging caution. “The promise of zero capital gains tax is tempting,” one planner said, “but don’t bet the farm until it’s signed, sealed, and delivered.”

Still, with the 2025 tax season approaching fast, the stakes are enormous. If passed, Trump’s plan would not only mark one of the most dramatic tax overhauls in modern history—it would redefine the very incentives that drive American investment and wealth accumulation.

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Jury verdict against oil industry worries critics, could drive up energy costs

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Offshore drilling rig Development Driller III at the Deepwater Horizon site May, 2010. 

From The Center Square

By 

“Did fossil fuels actually cause this impact?” Kochan said. “Then how much of these particular defendants’ fossil fuels caused this impact? These are the things that should be in a typical trial, because due process means you can’t be responsible for someone else’s actions. Then you have to decide, and can you trace the particular pollution that affected this community to the defendant’s actions?”

A $744 million jury verdict in Louisiana is at the center of a coordinated legal effort to force oil companies to pay billions of dollars to ameliorate the erosion of land in Louisiana, offset climate change and more.

Proponents say the payments are overdue, but critics say the lawsuits will hike energy costs for all Americans and are wrongly supplanting the state and federal regulatory framework already in place.

In the Louisiana case in question, Plaquemines Parish sued Chevron alleging that oil exploration off the coast decades ago led to the erosion of Louisiana’s coastline.

A jury ruled Friday that Chevron must pay $744 million in damages.

The Louisiana case is just one of dozens of environmental cases around the country that could have a dramatic – and costly – impact on American energy consumers.

While each environmental case has its own legal nuances and differing arguments, the lawsuits are usually backed by one of a handful of the same law firms that have partnered with local and state governments. In Louisiana, attorney John Carmouche has led the charge.

“If somebody causes harm, fix it,” Carmouche said to open his arguments.

Environmental arguments of this nature have struggled to succeed in federal courts, but they hope for better luck in state courts, as the Louisiana case was.

Those damages for exploration come as President Donald Trump is urging greater domestic oil production in the U.S. to help lower energy costs for Americans.

Daniel Erspamer, CEO of the Pelican Institute, told The Center Square that the Louisiana case could go to the U.S. Supreme Court, as Chevron is expected to appeal.

“So the issue at play here is a question about coastal erosion, about legal liability and about the proper role of the courts versus state government or federal government in enforcing regulation and statute,” Erspamer said.

Another question in the case is whether companies can be held accountable for actions they carried out before regulations were passed restricting them.

“There are now well more than 40 different lawsuits targeting over 200 different companies,” Erspamer said.

The funds would purportedly be used for coastal restoration and a kind of environmental credit system, though critics say safeguards are not in place to make sure the money would actually be used as stated.

While coastal erosion cases appear restricted to Louisiana, similar cases have popped up around the U.S. in the last 10 to 15 years.

Following a similar pattern, local and state governments have partnered with law firms to sue oil producers for large sums to help offset what they say are the effects of climate change, as The Center Square previously reported.

For instance, in Pennsylvania, Bucks County sued a handful of energy companies, calling for large abatement payments to offset the effects of climate change.

“There are all kinds of problems with traceability, causation and allocability,” George Mason University Professor Donald Kochan told The Center Square, pointing out the difficulty of proving specific companies are to blame when emissions occur all over the globe, with China emitting far more than the U.S.

“Did fossil fuels actually cause this impact?” Kochan said. “Then how much of these particular defendants’ fossil fuels caused this impact? These are the things that should be in a typical trial, because due process means you can’t be responsible for someone else’s actions. Then you have to decide, and can you trace the particular pollution that affected this community to the defendant’s actions?”

Those cases are in earlier stages and face more significant legal hurdles because of questions about whether plaintiffs can justify the cases on federal common law because it is difficult to prove than any one individual has been substantively and directly harmed by climate change.

On top of that, plaintiffs must also prove that emissions released by the particular oil companies are responsible for the damage done, which is complicated by the fact that emissions all over the world affect the environment, the majority of which originate outside the U.S.

“It’s not that far afield from the same kinds of lawsuits we’ve seen in California and New York and other places that more are on the emissions and global warming side rather than the sort of dredging and exploration side,” Erspamer said.

But environmental companies argue that oil companies must fork out huge settlements to pay for environmental repairs.

For now, the Louisiana ruling is a shot across the bow in the legal war against energy companies in the U.S.

Whether the appeal is successful or other lawsuits have the same impact remains to be seen.

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