2016 B.C. Budget Summary
February 16, 2016 – Victoria, B.C. Today’s budget was the 4th consecutive balanced budget tabled by Minister of Finance Mike de Jong. BC’s economic performance in 2015 shows slightly higher estimated growth than initially forecast, with growth in retail sales, housing starts and employment exceeding expectations. Budget 2016 projects surpluses of $264 million in 2016/17 and rising to $373 million in 2018/19.
It includes $1.6 Billion in new and increased spending over three years including new initiatives such as:
• reductions to Medical Services Plan (MSP) Premiums
• $217 million for the Ministry of Children and Family Development to support vulnerable youth and their families
• $456 million for the Ministry of Social Development and Social Innovation to support those in need and to increase monthly disability income assistance rates.
• $143 million over three years to enhance key areas of the B.C. economy that support jobs in communities, including the new $75-million Rural Dividend Program to help small communities strengthen and diversify their economies, additional support for youth trades training, building the B.C. wood brand in India, and additional BC Transit funding.
Health: The Ministry of Health’s annual budget will increase by $523 million in 2016/17, and the ministry’s budget is targeted to reach over $19 billion by 2018/19. As noted above, the average rate of growth over the three year fiscal plan will be 3 percent ($3.2 billion over 3 years). These increases include funding for the health sector’s portion of the Economic Stability Dividend that will increase salaries for health care workers.
Pharmacare: Pharmacare budget increases by $72 million to just over $1.17 Billion in 2016/17 then remains flat for the next three fiscal years.
Health Authorities: Health authority and hospital society spending is projected to rise from $13.6 billion in 2015/16 to $14.4 billion by 2018/19 – an increase of $780 million, or 5.7 per cent over the three year period. The spending increase is mainly due to additional staffing and operating costs incurred to meet the projected volume growth in healthcare services delivered by these organizations.
Capital: Capital spending on infrastructure in the health sector will total $2.9 billion over the next 3 years. These investments support new major construction projects and upgrading of health facilities, medical and diagnostic equipment, and information management/technology systems.
Medical Services Plan (MSP) Premium: Changes to Medical Services Plan (MSP) premiums and enhanced premium assistance effective Jan. 1, 2017, will help lower-income families, individuals, and seniors with the cost of living. All children will be exempted from MSP premiums, directly benefitting about 70,000 single-parent families. By making children free and expanding premium assistance, an additional 335,000 people will see their premiums reduced and an additional 45,000 people will no longer pay MSP premiums at all.
Property Transfer Tax: Government is acting to help the housing market respond to high demand for homes, which is resulting in rapidly rising prices, particularly among single-family homes in the Lower Mainland.
Budget 2016 introduces a new full exemption from the property transfer tax on newly constructed homes (including condominiums) priced up to $750,000. This exemption will save purchasers up to $13,000 on a newly constructed home and is estimated to provide approximately $75 million in property transfer tax relief for new construction in 2016-17. The Home Owner Grant threshold is increased from $1.1 million to $1.2 million for the 2016 tax year.
Infrastructure: Budget 2016 continues to invest in new and upgraded infrastructure to support services and jobs.
Taxpayer supported infrastructure spending will inject $12 billion into the economy over the next
three years, build new projects, and expand and sustain existing infrastructure.
• $3.1 billion in total transportation infrastructure investment, including highway upgrades and transit infrastructure.
• $2.9 billion for new major health care projects and upgrades to health facilities, including the new Centre for Mental Health and Addictions.
• $2.5 billion for post-secondary facilities, including building capacity and helping meet the province’s future workforce needs in key sectors
• $1.7 billion to maintain, replace, renovate, expand and seismically upgrade K-12 school facilities, including new school space to accommodate increasing enrollment.
Operating Debt: By the end of 2015-16, the direct operating debt will be reduced by $2.2 billion since 2012/13 budget. Under the current fiscal plan, with continued fiscal discipline, there will be an opportunity for B.C. to be free of operating debt as early as 2020.
Corporate Income Tax Rates: No changes to corporate taxes were announced. As a result, B.C.’s corporate income tax rates effective January 1, 2016 remain as follows:
Corporate Income Tax Rates*
|British Columbia||BC & Federal|
|M & P||11%||26%|
|Small Business 1 & 2||2.5%||13%|
*Table provided by: KPMG
1 on first $500,000 of active business income
2 as a result of scheduled decreases in the federal small business income tax rate, the combined federal and British Columbia small business rate will decrease to 12.5% on January 1st, 2017, 12% on January 1, 2018 and 11.5% on January 1, 2019
Small Business Equity Tax Credit:Commencing in 2016 the budget for the small business venture capital tax credit is increased by $5 million, $3 million of which will be for direct investments in eligible new corporations. This allows for up to $16.7 million annually in additional equity financing for qualifying corporations.
2016 Budget Notes prepared by:
Mike Cunningham, Graphite Communications
Susan Ogilvie, LifeSciences BC