The Top Line
The Government of British Columbia (B.C.) unveiled its Budget 2017/18 this afternoon. Coming just weeks before the writ period for the May 9, 2017 B.C. General Election is set to begin, the Budget announces a wealth of new spending and substantial tax cuts. The B.C. Liberal Government is hoping that the initiatives and commitments outlined in today’s Budget will help set the table for their re-election in May. For its part, the Official Opposition New Democratic Party (NDP) promptly labelled Budget 2017/18 a “forget everything” plan – a package of spending and tax cuts designed to make voters forget what the NDP says has been years of Liberal mismanagement and neglect of essential services. Early polling shows Election 2017 is a dead heat between the Liberals and the NDP.
Budget 2017/18 has a three-year fiscal forecast horizon, and the Government expects the provincial economy to be strong over that period. The Government’s growth projections are 2.1% for 2017 and 2018, and 2% for 2019 – though private sector economists predict that the economy will grow even faster than that. Meanwhile, the projected surplus in Budget 2017/18 is $295 million, and surpluses are also expected in 2018/19 and 2019/20. The Government is using those favourable economic circumstances to fund significant infrastructure and public service investments over the next three years, coupled with generous tax reductions.
Major announcements of note for stakeholders are:
- Effective April 1, 2017, the small business tax rate will decrease to 2% from 2.5%;
- Starting October 1, 2017, the Government will phase out the PST on electricity, first by reducing the tax rate to 3.5% and moving to full elimination by April 1, 2019;
- $13.7 billion is allocated over three years for taxpayer-supported infrastructure spending;
- $87 million in additional funding is allocated for the B.C. Tech Strategy; and
- The Government will introduce several targeted income tax credits and will gradually eliminate the Province’s Medical Services Plan premiums on high-income households.
What This Means to You
The Liberals hold a majority in the Legislative Assembly, and thus have the ability to pass all budget-related items into law quickly. Notably, much of the spending and tax relief proposed in the Budget is scheduled for implementation after Election 2017, making this fiscal plan very much contingent on the re-election of the Liberal Party.
In that light, Budget 2017/18 should be viewed as the opening salvo by the Liberals in Election 2017. Similarly, the NDP reaction to the Budget shows that Party positioning itself as the truly progressive option for British Columbians ahead of the election. TSA will be following B.C.’s Election 2017 closely, and looks forward to assisting stakeholders in navigating the B.C. political environment. Please contact us if you have any questions.