B.C. government budget projects “modest” surplus, includes tax increases
The B.C. government presented what they project will be a surplus budget today (February 19).
But the estimates tabled by B.C. Finance Minister Mike de Jong will include a two-year income tax increase for anyone making more than $150,000 a year, a corporate income tax hike, and an increase in Medical Services Plan premiums.
The government is also balancing the books through reduced average spending increases of 1.5 percent a year, and through the sale of surplus government properties.
De Jong called the budget a “modest, responsible, and achievable plan” and said the document is “not your typical pre-election budget”.
“In an environment of ongoing global volatility, an environment of continuing uncertainty, we are more determined than ever to hold the line on government spending, and to honour our commitment to the people of British Columbia that we will not spend more of their money than government receives,” he said in the B.C. Legislature.
De Jong said the government's fiscal plan is projected to deliver a “modest surplus” of $197 million, followed by a $211 million surplus in 2014-15, and $460 million the year after.
Investments in the budget include $13 million toward the renewal of single room occupancy hotels in the Downtown Eastside, $32 million over three years toward the creation of new child care spaces, $52 million to maintain RCMP services, $1.9 billion for school replacement projects, and $18 million for the Creative Futures initiative that was announced last month.
"I expect that some sectors like the film industry, who were looking for specific initiatives, will feel overlooked,” said de Jong, referencing recent calls for increased tax credits for the province's film production sector.
“In recognizing the challenges that they and others face, I want to emphasize that our ability to do more in the future is enhanced significantly with a robust growing economy and a balanced fiscal plan, and we look forward to working with them in the future."
Other spending promised in the government's fiscal plan includes $146 million toward a new B.C. Early Childhood Tax Benefit to be implemented in April 2015, and a one-time $1,200 grant toward the Registered Education Savings Plan of any B.C. resident's six-year-old child.
Jordan Bateman, the B.C. director of the Canadian Taxpayers Federation, criticized the tax increases outlined in the budget.
“These taxes hurt families by making it more expensive to live here and for businesses to set up shop and employ people,” Bateman said in a news release.
His organization noted the budget also includes “the sixth Medical Services Premium (MSP) tax hike in five years”.
Effective October 1, 2013, tobacco taxes will be increased by $2 per carton of cigarettes.
The government also faced criticism from some labour organizations including the Canadian Union of Public Employees of B.C. Secretary-treasurer Mark Hancock said the plan “effectively cuts funding to education and health care”.
“The real cost of balancing the budget-even if we accept this thoroughly discredited government’s assumptions-is being paid out of the pockets of working families, students and those least able to afford higher fees and service charges,” he claimed in a news release.
Others, such as the B.C. Chamber of Commerce and the Vancouver Board of Trade, praised the provincial budget. The board of trade gave the plan a “grade of B+”.
“This budget has returned B.C. to a balanced budget environment against a backdrop of few choices and increasing pressure to spend,” Iain Black, President and CEO of The Vancouver Board of Trade, said in a news release.
“Our Members have similarly difficult choices to make in economically challenging times, and we are in agreement with the prudent assumptions, and lack of election-year-type spending promises.”
The Canadian Federation of Independent Business said it was disappointed by the 2013 corporate tax increase, but grateful that the small business tax rate remains unchanged.
According to budget documents, the sale of over 100 government properties and assets is projected to generate $625 million over the next two years.
Income tax increases will consist of a general corporate income tax increase to 11 percent from 10 percent, effective April 1, 2013, and a two-year, 2.1 percent increase in the personal income tax rate for those earning more than $150,000. The corporate tax increase was first announced in last year's budget, with the implementation date initially set for April 1, 2014.