Provincial Budget Summary by BC Chamber of Commerce
February 23, 2018
Victoria, February 20, 2018 – Today’s (yesterday’s) provincial budget reflects a social agenda with meaningful investments in both housing attainability and childcare – two areas of deep interest to the BC Chamber network – but it leaves the business community to pick up a $1.92 billion tab on MSP by the fiscal year 2020.
The BC Chamber’s 2017-18 Collective Perspective survey flagged “affordability of housing” as the top issue “hurting” businesses in BC. Today’s announcements intended to “stabilize [the] market and curb demand” with investments of more than $6 billion over 10 years are a welcome move that will help small business owners address another key challenge in BC’s tight labour market: recruiting and retaining staff.
“Less encouraging,” says Val Litwin, President & CEO of the BC Chamber, “is the news that businesses will be footing the bill to the tune of almost $2 billion by 2020-21 to cover the full phase-out of MSP premiums.” Added Litwin, “In fact, this new burden, shifted entirely onto the shoulders of business owners, flies in the face of an innovative economy – a phrase that featured prominently in every Ministers’ mandate letter in July, but very little in today’s speech. This new tax will have a negative effect on growth and investment.”
When taken in conjunction with the loss of revenue neutrality (and increase) of the Carbon Tax, and increases to minimum wage and the corporate tax rate, businesses of all sizes – from dry cleaners on main street to family logging companies in the interior – are facing the cumulative effect of crippling tax increases that will challenge their ability to invest and grow. A quick bottom line impact analysis of the “Employer Health Tax” on business:
“Our members like to see balanced budgets,” said Litwin, “especially with capital investments in infrastructure, education, trade, and housing that support many businesses in the province through direct and indirect job creation,” said Litwin, “But this budget looks like it's being balanced on the back of business through accumulating tax increases.”
“Our economy grows when businesses are supported, taxes remain competitive with global competitors such as the US, and businesses are optimistic about hiring and investing,” said Litwin. “Given this government’s emphasis on innovation and the ‘emerging economy’, we expected to see a more holistic plan put in place for the reduction of red tape that has always proven to spur growth and, for example, more incentives to drive innovation and early adoption of new technologies.”
Business Highlights from Budget 2018:
$15.8 billion for critical infrastructure including schools, post-secondary institutions, health facilities, affordable housing, student housing, and transportation
Over $1 billion to create a universal child care plan (see BC Chamber’s Policy on Addressing Child Care Access)
$29 million over three years to support the expansion of the agricultural sector (see BC Chamber’s Policy on Business Opportunities for Agrifood/Seafood producers)
Some of the revenue collected from the Carbon Tax will be focused on support for emissions intense industry to transition to a low-carbon economy (see BC Chamber’s Policy on Revenue Neutral Carbon Tax)
Rural Dividend funding committed through to 2021 at $25 million a year
Other items of note that affect business locally are: the government is Expanding permissible use of MRDT revenues to include affordable housing. The municipal and regional district tax (MRDT) is currently used only to fund tourism marketing and product development. It will now be eligible for use in housing initiatives, providing an additional funding source for communities struggling with housing for seasonal tourism workers. Locally, Tourism Smithers is the destination marketing agency for Smithers.
Initiatives relating to local government include the leveraging of municipal tax exemptions for purpose-built rental housing by extending it to include provincial property taxes, examining the tax treatment of residential property in the Agricultural Land Reserve (ALR), and committing $5 million over three years to fund housing need assessments and a commitment to work with municipal partners on possible new policy tools, such as rental zoning.
Medical Services Plan (MSP) premiums will be fully eliminated on January 1, 2020. The loss of MSP revenue is offset by a new employer payroll tax that is charged fully on payrolls above $1.5 million and partly charged on payrolls from $500,000 to $1.5 million. Employers with payrolls below $500,000 are exempt.
Ferry fares are being frozen on the three largest coastal routes and a 15% reduction implemented for non-major routes. A full 100% seniors discount will be restored for travel from Monday to Thursday.
About BC Chamber of Commerce
The BC Chamber is the province’s largest and most broadly-based business organization driving insights to its partners, government and Chamber network. With 36,000 members hailing from every nook and cranny of the province, the BC Chamber knows what’s on BC’s mind.