Balanced Budget 2016. BC’s continued fiscal discipline and steady economic growth are providing the means for new and increased funding for services, helping families with the cost of living, and taking new steps to help promote home ownership. Learn more: http://ow.ly/Yp4Tl #BCBudget
British Columbia’s continued fiscal discipline and steady economic growth are providing the means for new and increased funding for services, helping families with the cost of living, and taking new steps to help promote home ownership, Finance Minister Michael de Jong announced today.
Balanced Budget 2016 invests $1.6 billion in new and increased spending over three years on core services in addition to annual 3% increases in the health ministry budget, almost $500 million of which is funded by lower interest costs due to the retirement of operating debt.
Government will once again balance its budget in 2015-16, and in each year of the three-year fiscal plan. Within the balanced budget, new and increased investments in government programs and services include:
- $3.2 billion over three years added to the Ministry of Health compared to 2015-16.
- $673 million in additional support for children, families and individuals in need over three years, including $217 million for the Ministry of Children and Family Development to support vulnerable youth and their families, and $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.
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 cost of this measure will be offset by adding a third tier to the property transfer tax rate, increasing the rate to 3% from 2% on the fair market value of property above $2 million.
Proposed changes to the Property Transfer Tax Act will authorize government to collect new information from owners when they register their property. The government will resume collecting data that specifically identifies foreign purchasers. Beginning this summer, individuals who purchase property will need to disclose if they are citizens or permanent residents of Canada, and, if they are not, their citizenship and country of residence.
Government is also investing capital funding of $355 million over the next five years for construction and renovation of affordable housing for people with low to moderate incomes.
A portion of the dividend derived from the government’s strengthening economy, fiscal discipline, and reduction in operating debt will be used to establish the B.C. Prosperity Fund. Budget 2016 applies an inaugural commitment of $100 million from the forecast 2015-16 surplus to establish this long-term legacy intended to:
- Help eliminate the Province’s debt over time.
- Invest in health care, education, transportation, family supports and other priorities that provide future benefits to British Columbia.
- Preserve a share of today’s prosperity for future generations.
Government has identified its lead priority for the B.C. Prosperity Fund as reducing taxpayer-supported debt. Government will allocate a minimum of 50% of each year’s allocation to the fund to debt retirement, and a minimum of 25% will be saved to accumulate earnings. The remainder will be available for core government priorities that provide long-term benefits to British Columbia. In addition, future government surpluses including LNG revenues will help grow the fund over time.
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. This includes:
- $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, as set out in the B.C. Skills for Jobs Blueprint.
- $1.7 billion to maintain, replace, renovate, expand and seismically upgrade K-12 school facilities, including new school space to accommodate increasing enrolment.
The surplus forecast in each year of the fiscal plan helps keep taxpayer-supported debt affordable. By the end of 2015-16, the direct operating debt will be reduced by $2.2 billion since government resumed balancing its 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 – the first time in 45 years the Province would not be carrying the burden of operating debt.
The independent British Columbia Economic Forecast Council is projecting provincial real GDP growth to be 2.7% in 2016, 2.6% in 2017, and an average of 2.4% over 2018-20. Government’s economic growth forecast remains prudent relative to the Economic Forecast Council at 2.4% in 2016, 2.3% in 2017, and 2.3% in 2018.
Minister of Finance Michael de Jong ─
“We’ve been following a prudent plan that includes a focus on paying down our direct operating debt, which is projected to be at its lowest point since 1984-85 if we stay on course.”
“B.C. families know that working hard to pay off their credit card debt means they will save money on interest payments, and the same is true of government. A reduction in the operating debt means almost $500 million that would have gone to interest payments can instead be invested in priority programs for British Columbians.”
“With a track record of successive balanced budgets, B.C. remains in a fiscal position envied by many jurisdictions around the world. We are forecast to lead Canadian provinces in economic growth this year and are continuing to make fiscal decisions that further strengthen our economy, create jobs and make life more affordable for British Columbians.”
For more details on Budget 2016, visit: http://bcbudget.gov.bc.ca
For online information and services, visit the Province’s website: http://www2.gov.bc.ca
Jamie EdwardsonCommunications Director
Ministry of Finance
Newly built homes priced up to $750,000 will be fully exempt from the property transfer tax when bought by Canadian citizens or permanent residents as a principal residence and lived-in for a full year. The measure aims to assist purchasers and help stimulate the construction of moderately priced homes. The exemption will save a purchaser up to $13,000, and provide an estimated $75 million in property transfer tax relief for new construction in 2016-17.
Partial exemptions are available for new housing valued up to $800,000. Newly constructed housing eligible for the exemption includes the first purchase of a new housing unit or a newly subdivided unit.
Those who buy land and build homes to be used as their principal residence can also apply to receive a refund of property transfer tax rather than an exemption at the time of registration, if they complete construction and move in within a year of purchase.
The program will be available to buyers regardless of how long they have lived in British Columbia, meaning those who move to B.C. to take jobs, start companies and build their lives here will also benefit. The exemption will be available to first-time buyers and previous property owners alike.
The New Housing exemption will be largely funded by increasing the property transfer tax rate to 3% on the portion of fair market value over $2 million. The 1% rate on the first $200,000 of property value and the 2% rate on the value of a property between $200,000 and $2 million continue to apply. The new higher rate is expected to raise an additional $75 million each year — the approximate cost of the New Housing exemption.
Creating new housing supply is critical to improving housing affordability in B.C.’s real estate market. Relatively high housing prices in B.C., and particularly in the Lower Mainland, are driven by increased demand that has resulted from B.C.’s economic and population growth, as well as constrained geography and a lack of available land. The New Housing exemption is expected to benefit owners of about 22,000 new homes in 2016, many of which will be constructed in the Vancouver area.
Investments in affordable housing:
Budget 2016 also includes measures to provide more affordable housing options for lower-income earners. Capital spending of $355 million over five years will support the construction or renovation of more than 2,000 affordable housing units in communities throughout the province.
The Province also continues to work in collaboration with other levels of government to support British Columbians’ ability to buy or rent at prices they can afford. Through the Community Partnership Initiatives program, BC Housing partners with municipalities, non-profit societies and other community-based organizations to create affordable housing. The program arranges construction or long-term financing for non-profit societies, connects stakeholders through partnership referrals and provides advice.
Developing better data on cost drivers:
Proposed changes to the Property Transfer Tax Act will authorize government to collect new information from owners when they register their property.
- Purchasers will be required to identify themselves as Canadian citizens or permanent residents.
- Individual transferees who are not Canadian citizens or permanent residents will be required to disclose their citizenship.
- Corporations will be required to disclose their directors’ citizenship.
- Transferees will also be required to disclose whether or not they are holding the land as bare trustees when they register and provide information on the settlor and beneficiaries of the bare trust.
Citizenship disclosure was required with land transfers until 1998. These changes will generate data that will allow government to monitor the volume of foreign investment and use of bare trusts and assess what effect, if any, they have on pricing.
Balancing supply and demand in an era of strong net in-migration from elsewhere in Canada and around the world requires a new focus on the efficient support of new housing supply at as low a cost as possible. BC Housing will conduct a study on the key factors affecting housing affordability in British Columbia, which may then contribute to policy-making across all levels of government.
Government is also exploring ways to make the components of the cost of new housing more transparent to home buyers, such as local government costs and fees. The Province urges municipal leaders and regional directors, who are responsible for planning, zoning and development regulation, to use the broader tools at their disposal to support the Province’s efforts and further the creation of new housing supply.
Housing markets in the Vancouver area have historically been expensive due to the pressures of supply and demand. The population of Greater Vancouver in particular has increased 70% since the mid-1980s, compared to 35% in the rest of Canada, and B.C. economic growth has averaged 2.6% annually since 2001, compared to 1.9% in the rest of Canada. The 20-year trend of declining mortgage rates has made it easier for buyers to carry their mortgage costs.
With increasing demand and restricted supply of single-family properties, prices for single-family homes in most areas of Greater Vancouver have increased between 45% and 70% over the past five years, while prices for multi-family homes have increased between 15% and 40%.
Any long-term mitigation of housing prices and housing affordability in the Lower Mainland must address adequate supply of affordable new construction, particularly multi-family housing.
Without an increase in housing supply, there will simply be more buyers competing in the same market, ultimately driving prices even higher. Increased densification is a tool local governments can use to promote the construction of affordably priced housing and offset the factors driving prices, such as low interest rates, economic activity, rising population due to in-migration, and in the Lower Mainland especially, a constrained geography.
The Newly Built Home Exemption reduces or eliminates the amount of property transfer tax you pay when you purchase a newly built home:
Information on property transfer tax: http://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax
For questions about the New Housing Exemption or property transfer tax call 1 888 355-2700 or email firstname.lastname@example.org
Changes to Medical Services Plan (MSP) premiums and enhancements to premium assistance will improve fairness and help B.C. families with the cost of living. All changes will take effect Jan. 1, 2017.
With these changes, the calculation of MSP premiums will no longer include children. Instead, the monthly rate for each household will be based only on the number of adults. For example, a household with one parent and two children will be charged the single adult rate, rather than the three-person rate they pay today — saving this family $864 per year. A single adult will pay $78 per month.
The Province will invest an additional $70 million annually to enhance premium assistance, helping more lower-income families, seniors and individuals qualify for reduced rates. Families and individuals receiving premium assistance who currently pay partial premiums will see their premiums reduced, and additional households earning above the current premium assistance threshold will qualify for assistance.
For example, a couple with two children earning up to $51,000 may qualify for assistance, and a single parent with two children earning up to $48,000 may qualify for assistance.
With these changes, an additional 335,000 people will see their premiums reduced, including 70,000 single parent families. An additional 45,000 people will no longer pay MSP premiums at all. Once the changes have been implemented, nearly two million British Columbians will pay no premiums at all.
A new calculator is now available on the government website to help British Columbians estimate whether they could qualify for premium assistance today, and also when the enhancements take effect in 2017.
MSP premiums fund only a small part of the significant investment government makes in health-care services every year. MSP premiums are forecast to raise about $2.5 billion in 2016-17, and personal income tax is forecast to raise about $8.2 billion. Total spending on health services in 2016-17 is forecast at $19.6 billion. Corporate income tax, sales tax, natural resource and other government revenues are all required to help fund the cost of health care.
B.C. families have one of the lowest overall tax burdens in Canada, including health-care premiums and payroll taxes, income taxes, consumption taxes and property taxes.
By eliminating children from MSP premiums:
- A single parent with one child will save $58 each month, or $696 per year.
- A single parent with two or more children will save $72 each month, or $864 per year.
As a result of enhancing premium assistance:
- A single adult earning up to $42,000 may qualify for reduced premiums.
- A single parent with one child earning up to $45,000 may qualify for reduced premiums.
- A couple earning up to $45,000 may qualify for reduced premiums.
- A single senior earning up to $45,000 may qualify for reduced premiums.
- A single parent with two children earning up to $48,000 may qualify for reduced premiums.
- A couple with two children earning up to $51,000 may qualify for reduced premiums.
- A senior couple earning up to $51,000 may qualify for reduced premiums.
As a result of eliminating children from premiums and enhancing premium assistance:
- A single parent with two children can save up to $1,224 per year.
- A single parent with one child can save up to $1,056.
- A couple with two children can save up to $648 per year.
- A senior couple can save $480 per year.
- A couple can save $480 per year.
- A single senior can save $324 per year.
- A single adult can save $324 per year.
Premium assistance eligibility:
Premium assistance is based on an individual’s net income for the preceding tax year as reported on line 236 of their Notice of Assessment (or for couples, their combined net income) adjusted for age, family size, disability and any reported Universal Child Care Benefit and Registered Disability Savings Plan Income.
A new calculator is now available on the government website to help British Columbians estimate whether they could qualify for premium assistance today, and also when the enhancements take effect in 2017. For more information, visit: https://extranet.gov.bc.ca/forms/gov/health/msppa.html
Further details on when individuals can apply for the enhanced premium assistance that will be in effect starting Jan. 1, 2017, will be provided in the coming months.
Read about the Regular Premium Assistance program:
Use this online calculator to find out if you could qualify for Regular Premium Assistance: https://extranet.gov.bc.ca/forms/gov/health/msppa.html
Learn more about the impact of changes to MSP premiums and enhancements to premium assistance: http://bcbudget.gov.bc.ca/2016/bfp/2016_budget_and_fiscal_plan.pdf#MSP
For questions about MSP and premium assistance, call 1 800 663-7100.
B.C.’s economic performance in 2015 shows slightly higher estimated growth than initially forecast, with growth in retail sales, housing starts and employment exceeding expectations. While some of that domestic momentum is expected to continue into 2016, lower than expected commodity prices and dampened external demand are weighing on exports growth.
The government forecasts the B.C. economy to grow by 2.4% in 2016, 2.3% in 2017 and 2.3% in 2018.
Downside risks to B.C.’s economic outlook include the potential for a slowdown in North American economic activity, ongoing fragility in Europe, slower than anticipated Asian demand, particularly in China, uncertainty in the outlook for the Canadian dollar and weak inflation.
Total government revenue is forecast at $48.1 billion in 2016-17, $49.0 billion in 2017-18, and $50.1 billion in 2018-19.
Total expense over the three-year plan is forecast at $47.5 billion in 2016-17, $48.4 billion in 2017-18 and $49.4 billion in 2018-19.
In addition to annual 3% funding lifts for the Ministry of Health, government is increasing ministry operating budgets by $1.6 billion over the three-year fiscal plan compared to Budget 2015 amounts, including $673 million in additional support for children, families and individuals in need.
Taxpayer-supported infrastructure spending on hospitals, schools, post-secondary facilities, transit and roads will total $12 billion over the fiscal plan period.
British Columbia’s taxpayer-supported debt-to-GDP ratio is projected to progressively decline to 16.3% by 2018-19.
Debt-to-revenue is projected to be below the Budget 2015 forecast in each year of the Budget 2016 plan, with the ratio averaging below 93% over the next three years.
Direct operating debt is forecast to decline by $6.6 billion over the course of the fiscal plan, from $9.3 billion in 2014-15 to $2.7 billion in 2018-19 — a decrease of 71%.
Taxpayer-supported interest costs continue to remain low, averaging 3.7 cents per dollar of revenue over the three-year fiscal plan.
Total taxpayer-supported debt is forecasted to be $43.2 billion in 2016-17, $44.2 billion in 2017-18 and $45.1 billion in 2018-19, reflecting a significant increase in infrastructure investment over the next three years.
The total provincial debt, which includes both taxpayer-supported and self-supported debt of Crown corporations such as BC Hydro, as well as the $350 million annual forecast allowance, is forecast to be $67.7 billion in 2016-17, $69.9 billion in 2017-18 and $71.9 billion in 2018-19.
Budget 2016 projects surpluses of $264 million in 2016-17, $287 million in 2017-18 and $373 million in 2018-19.
The fiscal plan includes contingencies of $450 million in 2016-17, $400 million in 2017-18 and $400 million in 2018-19 to help manage unexpected costs and priority initiatives. As well, the fiscal plan includes forecast allowances of $350 million in each of 2016-17, 2017-18 and 2018-19 as a hedge against volatility, including unforeseen changes in revenue.
For more details on Budget 2016, visit: http://bcbudget.gov.bc.ca
For online information and services, visit the Province’s website: http://www2.gov.bc.ca
Cameron Muir_Chief Economist_BC Real Estate Association.mov
Gord Stewart_Independent Contractors and Business Association of BC.mov