1. The general corporate income tax rate will rise from 11% to 12% on January 1, 2018. [The budget maintains the small business corporate income tax rate reduced from 2.5% to 2% effective April 1, 2017 (announced in the February 2017 budget).]
2. The carbon tax will rise $5/tonne of CO2e annually for four years beginning April 1, 2018. [The rate will be $50 per tonne in 2021.] The requirement for absolute revenue neutrality for the carbon tax is being removed to permit the government to use carbon tax revenue for green initiatives.
3. There is a significant change to Medical Services Plan (MSP) premium reduction. Now while threshold will rise, there will be a uniform cut of 50% on all MSP premiums on January 1, 2018. This will improve the operational complexity for employers who pay MSP premiums on behalf of employees.
4. The government will maintain the commitment to phase-out the application of the provincial sales tax on electricity purchases by business. The PST rate on electricity will be reduced from 7% to 3.5% on a (fall 2017) date to be specified by regulation; the PST on electricity will be eliminated effective April 1, 2019. [Residential electricity is already provincial sales tax-exempt.]
British Columbia’s minimum wage rises to $11.35/hour on September 15, 2017. Future increases will be based upon recommendations from the Fair Wages Commission (to be appointed Fall 2017).
Other significant budget updates include: (a) increasing the individual income tax rate on income over $150K from 14.7% to 16.8% on January 1, 2018; (b) initiatives to increase the construction of social housing, increase the number of child care spaces, increase K-12 public education spending, and increase social assistance rates; (c) the elimination of tolling on two highway bridges in Metro Vancouver; increase in spending related to fentanyl and wildfire emergencies; and, (d) initial funding to develop a comprehensive poverty reduction strategy (including a basic income pilot in a local indigenous community).
The new B.C. government has updated the 2017 provincial budget (which was initially introduced by the previous government in February 2017 but was not passed by the legislature). The government maintained an operating budget where there is a surplus of revenues over expenditures. The provincial debt and debt-to-GDP numbers continue to rise when capital expenditures are taken into account. Total debt will rise to $66.8B at the close of the 2017/18 fiscal year and $69.8B at the close of 2018/19.
In the September (BC NDP) budget, expenses are $1.7B higher than in the February (BC Liberal) budget (at $51.9B versus $50.2B). [Revenues are $1.6B higher (at $52.4B versus $50.8B).]
The Ministry forecasts that B.C. retail sales will grow 5.9% in 2017, 4% in 2018 and 3.6% annually over the medium term.
RCC will make a presentation to the B.C. legislature’s standing committee on finance in relation to the spring 2018 provincial budget. As always, members are invited to provide contributions to the content of the presentation.
If you have any questions or concerns, please do not hesitate to contact: Greg Wilson, Director, Government Relations (B.C.) at 604-730-5254 or [email protected].