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NEWS RELEASE
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September 1,
2009 |
Ministry of Finance |
PROTECTING
VITAL SERVICES, BUILDING FOR THE FUTURE
VICTORIA
– The B.C. government is protecting vital services and positioning British
Columbia for renewed economic growth, Finance Minister Colin Hansen announced today
as he released the September Budget Update 2009.
“We are taking steps to protect the
critical public services British Columbians rely on, To promote new investment
and growth in our economy and move forward with long-term initiatives that will
improve the quality of life throughout the province,” said Hansen. “But to achieve
these goals during a time of dramatically falling provincial revenues,
additional deficit spending is required.”
The Budget Update contains revised
deficit forecasts of $2.8 billion in 2009-10, $1.7 billion in 2010-11, and
$945 million in 2011-12.
“We are continuing to implement our
stimulus package,” said Hansen. “Over the next three years we are investing
nearly $14 billion with federal and local governments to build roads, schools,
health care facilities and other needed infrastructure in communities throughout
British Columbia, creating jobs, supporting families and generating new economic
activity.”
In partnership with other levels of
government, British Columbia’s capital construction plan could create up to
88,000 jobs over three years. Since February, $3.4 billion in infrastructure
projects throughout British Columbia have been announced. The Budget Update
provides for capital investments of $7.4 billion in 2009-10, $7.7 billion in
2010-11, and $6.5 billion in 2011-12.
Funding for the Ministry of Health
Services will increase by nearly 18 per cent over the next three years. By 2011-12,
funding for the Ministry of Health Services will reach $15.7 billion. The
Budget Update also maintains funding for kindergarten to Grade 12 education,
with per-student funding of over $8,200 in 2009-10.
To help keep health-care funding
sustainable, Medical Services Plan premium rates will increase for the first
time since 2002. Effective January 1, 2010, they will rise by about six per
cent – a maximum of $3 a month for single people, or $6 per family – consistent
with the increase in health care spending.
There are built-in protections for
lower-income British Columbians. Improvements to the MSP Premium Assistance
Program will ensure those in the greatest financial need will actually come out
ahead. In total, approximately 180,000 British Columbians will see their premium
costs reduced or eliminated.
The Budget Update supports
government’s plan to introduce full-day kindergarten in British Columbia. It
commits $151 million to provide the option of full-day kindergarten for 50 per
cent of five-year-olds starting school next year, and for all five-year-olds in
British Columbia by fall 2011.
To support British Columbians in
need, the Budget Update provides $420 million in additional funding over three
years to meet greater demand for income assistance during the economic
downturn.
The B.C. government is committed to
making British Columbia one of the most competitive jurisdictions in the world.
Towards this goal, the government proposes to introduce a harmonized sales tax
(HST) on July 1, 2010.
“According to leading economists,
harmonizing the PST and GST into one tax is the single biggest initiative that
British Columbia can do to stimulate the economy,” said Hansen. “The HST will remove
over $2 billion in costs for B.C. businesses, generating new investment and
ultimately creating more, better-paid, long-term and stable jobs for British
Columbians.”
The Budget Update raises the small
business income tax threshold to $500,000 from $400,000, effective January 1,
2010. This measure alone will save small business in B.C. $20 million
annually.
For individual taxpayers, the basic
personal income tax credit is being increased to $11,000 from $9,373, an
increase of 17 per cent, effective January 1, 2010. These savings will provide
taxpayers with increased financial flexibility and help stimulate the economy.
As a result of this and other tax
measures introduced by the government, as of Jan. 1, 2010, individual British
Columbians earning up to $118,000 annually will pay the lowest provincial
personal income taxes in Canada.
-30-
For the
Finance Minister’s speech and more details on the September Budget Update 2009,
visit http://www.bcbudget.gov.bc.ca/2009_Sept_Update/default.htm
Three
backgrounders follow.
Media
Contact:
Finance
Communications
250
356-9872
For more information on government
services or to subscribe to the Province’s news feeds using RSS, visit the
Province’s website at www.gov.bc.ca.
BACKGROUNDER 1
Ministry of Finance
HARMONIZED SALES TAX
(B.C. HST)
VICTORIA
– British Columbia intends to harmonize its Provincial Sales Tax (PST) with the
federal Goods and Services Tax (GST) effective July 1, 2010.
The HST
will combine a seven per cent B.C. rate with the five per cent federal GST, for
a combined HST rate of 12 per cent. Once implemented, B.C. will have the lowest
HST rate in Canada. The rate in all other provinces with an HST, including the
one proposed by Ontario, is 13 per cent.
The
introduction of the B.C. HST will make British Columbia one of the most competitive
jurisdictions in the world for business investment, reducing the effective tax on
new business investment by 40 per cent and resulting in significant investment
and job growth.
It is
estimated the HST will remove approximately $2 billion in costs for
job-supporting B.C. businesses, helping enhance competitiveness, increase
investment and productivity and promote job growth.
Savings
include:
• $880
million for the construction industry.
• $210
million for the transportation industry.
• $140
million for manufacturing.
• $140
million for the forestry sector.
• $80
million for mining and oil and gas.
Collecting,
accounting for, remitting and administering PST is a costly and complicated process
for both the business owner and the provincial government. The proposed HST eliminates
the current duplication of meeting separate requirements for PST and GST. B.C.’s
businesses are expected to save $150 million annually in administrative costs
under the new streamlined HST tax system.
B.C. will
provide point-of-sale rebates, which are similar to PST exemptions, for the provincial
portion of the HST on a number of consumer products including: gasoline and diesel
fuel for motor vehicles, books, children’s-sized clothing and footwear,
children’s car seats and car booster seats, diapers and feminine hygiene
products.
The B.C.
HST also includes the following measures:
• A
partial rebate of the provincial portion of the HST for new housing to ensure
that purchasers of new homes up to $400,000 bear no more tax than under the
current PST system. Homes above $400,000 will receive a flat rebate of $20,000.
• A
rebate for municipalities, charities and qualifying non-profit organizations so
that, on average, they pay no more provincial sales tax under the HST than
under the current PST.
• A
B.C. HST Credit, paid quarterly with the GST and Low Income Climate Action tax
credits, to offset the impact of the HST on those with low incomes.
• A
temporary delay in the provision of input tax credits for certain purchases by
businesses with taxable sales in excess of $10 million.
The
provincial government also proposes to provide a provincially-administered HST Exemption
for residential energy use.
The
federal government will provide British Columbia with $1.6 billion in
transitional funding to implement the B.C. HST. The full cost of B.C. HST
administration will also be borne by the federal government, saving the
Province an estimated $30 million annually in administration costs.
-30-
For the
Finance Minister’s speech and more details on the September Budget Update 2009,
visit http://www.bcbudget.gov.bc.ca/2009_Sept_Update/default.htm.
Media
Contact:
Finance
Communications
250
356-9872
BACKGROUNDER 2
Ministry of Finance
PROPOSED NON-TAX ITEMS IN BUDGET
MEASURES ACT
VICTORIA –
The Budget Measures Implementation Act (No. 2), 2009, tabled in the Legislature
with the September Budget Update 2009 is the legislative foundation for the initiatives
announced in the budget, and includes both non-tax and tax measures.
The
non-tax measures include:
· An
amendment to the Balanced Budget and Ministerial Accountability Act to extend
the period during which deficit budgets can be presented to the Legislature
from two to four years. This measure is needed to protect vital services in the
face of significant reductions in revenue as a result of the current recession.
· Amendments
to the Tourism Act, the Tourism British Columbia Act, the Hotel Room Tax Act,
and the Financial Information Act that are needed to ensure the promotion of
tourism is maintained and seamlessly transferred to the Minister of Tourism,
Culture and the Arts.
· Various
housekeeping measures, including:
o
An amendment to the Balanced Budget and
Ministerial Accountability Act to ensure any Supplementary Estimates are
automatically included in individual ministerial spending accountabilities and
to limit accountabilities to voted appropriations.
o
An amendment to the Budget Transparency
and Accountability Act to designate March 2, 2010, as the date for presenting
Budget 2010 to the Legislature.
o
An amendment to the Financial
Administration Act to award full status as voting members to private members
that are appointed to Treasury Board.
o
Transitional provisions to designate the
September Estimates as the new main estimates for 2009-10. The main estimates
are referenced by various acts for planning and reporting purposes.
-30-
For the
Finance Minister’s speech and more details on the September Budget Update 2009,
Visit http://www.bcbudget.gov.bc.ca/2009_Sept_Update/default.htm.
Media
Contact:
Finance
Communications
250
356-9872
BACKGROUNDER 3
Ministry of Finance
FISCAL PLAN 2009-10 – 2011-12
Economic Outlook
Ongoing
economic weakness, troubled global commodity and financial markets, and lower
domestic demand for B.C. goods and services resulted in British Columbia
undergoing a significant decline in economic activity during the first seven
months of 2009.
Risks to
B.C.’s economic outlook include a more severe and prolonged U.S. recession, continuing
weaker demand for B.C. exports and extended volatility in global financial and commodity
markets.
Domestic
demand slowed considerably due to lower consumer confidence levels and tighter
credit conditions. Housing starts declined and job loss increased as the
provincial unemployment rate reached 7.8 per cent in July 2009.
In 2008,
the provincial GDP contracted by 0.3 per cent, the first decline since 1982. The
Ministry of Finance forecasts B.C.’s economy to contract 2.9 per cent in 2009,
then grow by 1.9 per cent in 2010, and 2.7 per cent in 2011.
Revenue Outlook
Total
government revenue is forecast at $37.6 billion in 2009-10, $38.8 billion in 2010-11,
and $41.1 billion in 2011-12.
Due to a
sharp decline in taxation and natural resource revenues, projected government revenues
since the February 2009 Budget have declined by $3.9 billion over three years. This
will be partially offset by $1.6 billion in HST transition payments from the
federal government.
Compared to
the February 2009 Budget, taxation revenue is expected to be 6.9 per cent lower
in 2009-10, 4.6 per cent lower in 2010-11 and 2.9 per cent lower in 2011-12.
Over the
three-year plan, natural resource revenues are expected to be $2.1 billion
lower than estimated in February.
Expense Outlook
Total
government expense is forecast at $40.1 billion in 2009-10, $40.3 billion in 2010-11,
and $41.8 billion in 2011-12, an average annual increase of 3.0 per cent over
the three-year plan.
Administrative and Other Savings
The
Budget Update includes $3.4 billion in administrative and other savings over
the next three years, which will be used to help fund healthcare, education and
other priority programs.
These
savings will be achieved through reductions in advertising, discretionary
grants,
contracted
professional services, travel costs and office expenses.
Significant Budget
Decisions:
Infrastructure Investments
The
Budget Update reaffirms government’s investment in public infrastructure and
job creation projects. This includes capital spending of $21.6 billion on
schools, hospitals, roads, bridges, hydro-electric projects and other
infrastructure throughout the province over the next three years.
The total
capital investment of $21.6 billion is comprised of $12.7 billion in taxpayer-supported
capital investments and $8.9 billion in capital investments by Crown
corporations.
The
Budget Update projects capital investments of $7.4 billion in 2009-10, $7.7
billion in 2010-11, and $6.5 billion in 2011-12.
Health
Over the
next three years, health care will receive the largest share of funding
increases in government spending. By 2011-12, the Ministry of Health Services’
budget will increase by 18 per cent, reaching a total of $15.7 billion.
Education
Post Secondary - Funding for institutions that support the
post-secondary education system in B.C. will increase by $93 million in 2009-10
from 2008-09. Total post-secondary education spending will exceed $4.7 billion
in 2009-10.
K-12 Education - The Budget Update protects core K-12
education by maintaining per-pupil funding at over $8,200. Total K-12 education
spending is $5.7 billion in 2009-10.
Full-Day Kindergarten - An additional $151 million is
budgeted for the introduction of full-day kindergarten in British Columbia.
This includes $44 million for 2010-11 and an additional $107 million for 2011-12.
Social Services
The
Budget Update provides an additional $455 million for priority social services
and programs including $420 million over three years to support individuals and
families in need of income assistance.
Debt
Although
total government debt will increase over the next three years, the B.C. government
is keeping provincial debt affordable and managing its liabilities
conservatively.
The total
provincial debt is forecast to be $42.3 billion in 2009-10, $48.5 billion in 2010-11,
and $52.8 billion in 2011-12. As B.C. returns to balanced budgets, provincial legislation
mandates the use of year-end surpluses to pay down direct operating debt.
Budget Outlook
British
Columbia will run temporary deficits with a return to a balanced budget
projected within five years. The Budget Update contains revised deficit
forecasts of $2.8 billion in 2009-10, $1.7 billion in 2010-11, and $945
million in 2011-12.
The fiscal
plan includes contingencies of $500 million in 2009-10, $300 million in 2010-11
and $300 million in 2011-12. Additionally, a forecast allowance of $250 million
is included for each of the next three years.
-30-
For the
Finance Minister’s speech and more details on Budget Update 2009,
visit http://www.bcbudget.gov.bc.ca/2009_Sept_Update/default.htm.
Media
Contact:
Finance
Communications
250
356-9872
