BC Business
Finance Minister Mike de Jong unveiled a balanced budget on Tuesday, with a three-year plan to stay in the black. Here are a few of the big takeaways:
1. Some, but not much, action on housing affordability Yes, your provincial government realizes that Vancouver housing is expensive! Measures to address the daily escalation of real estate prices include a full exemption from property transfer tax for purchases of newly built homes priced up to $750,000, which would save the buyer up to $13,000. This exemption will be largely financed by a higher property transfer tax rate of three per cent on homes priced over $2 million. The budget also promises a measure to address foreign ownership of Vancouver real estate, widely believed to increase prices. Noting the dearth of data on the question of foreign ownership of B.C. property, the budget document states that people who purchase property in B.C. will now have to disclose whether or not they are Canadian citizens or permanent residents of Canada. If they are not, they will need to disclose their home country or state.
2. What B.C.’s business community thinks The document earned an ‘A’ from the Vancouver Board of Trade, for its plan to hold in spending, pay down direct operating debt and a low debt-to-GDP ratio of 17.4 per cent. Meanwhile, the B.C. Business Council’s chief economist Ken Peacock also pointed out that the budget did little to address mounting cost pressures for business. “With the return to the PST, the highest carbon tax in North America, higher MSP premiums, a complex and costly regulatory environment, (especially for land-based and infrastructure industries,) and in some municipalities an unfair property tax burden, B.C. businesses are challenged by escalating costs,” he said. “The good news is that a solid fiscal framework and relatively positive economic outlook in 2016-17 have created a foundation to enable the province to take action to bolster B.C.’s competitive position over time.”
3. Natural resource revenues will fall dramatically The outlook is grim for the resource sector in 2016. Revenue from mining taxes and other fees is expected to drop 26.1 per cent in 2016-17, mainly due to lower metal and coal prices. Energy revenue from electricity sales under the Columbia River Treaty and royalties and fees collected by the Oil and Gas Commission are also expected to fall 8.9 per cent next year, due to the effects of lower electricity and oil prices. Forest revenue is forecast to decline 2.5 per cent next year due to the impact of the expiry of the 2006 Softwood Lumber Agreement.
4. The government will cut back on its generosity to #bcfilm Times are good for the BC film industry, thanks to the low Canadian dollar, and therefore it’s time to give a little bit more to Caesar. Foreign production activity has increased more than 50 per cent from about $1.1 billion to $1.6 billion in 2014-15. Consequently, the cost of the province’s film tax credits, which have contributed to the province’s attractiveness to foreign productions, is increasing. The tax credits, which are based on B.C. labour costs, are estimated to cost the province $493 million in 2015-16. “With input from the film industry,” reads the budget, “the government will limit the growth of film tax credits across 2016-17 through 2018-19, but the cost of the credits will still be the highest amount ever budgeted.”
5. B.C.’s growing debt While the government expects to post a $527 million surplus this year, its total debt is on the rise. B.C.’s debt will hit $67.69 billion by 2017, up from $65.29 billion this year.