Budget 2018 puts people first, makes life more affordable for British Columbians



Budget 2018 puts people first, makes life more affordable for British Columbians

Media Contacts
Sonja Zoeller
Ministry of Finance
250 387-1248
Media Contacts
Sonja Zoeller
Ministry of Finance
250 387-1248


Fiscal Plan 2018-19 – 2020-21

A Strong B.C. Economy

British Columbia experienced stronger than previously forecast economic growth in 2017. Budget 2018 reflects an upward revision to the 2017 real GDP estimate, to 3.4% from 2.9%, estimated in the Budget 2017 Update, due to better-than-expected performance of B.C.’s main domestic indicators, including employment, retail sales, housing starts and exports.

Strong growth is expected to continue with the provincial economy projected to grow by 2.3% in 2018. Private sector forecasters expect B.C.’s economic growth to continue to rank near the top of provincial standings in the near-term.

The near-term global economic outlook has also improved since Budget 2017 Update, with upward revisions to 2018 real GDP growth for the United States, Japan, China and the euro zone.

Downside risks remain, including uncertainty regarding U.S. fiscal and trade policy and ongoing economic challenges in Asia and the euro zone. The Budget 2018 economic forecast is prudent, compared to the outlook provided by the independent Economic Forecast Council, in recognition of the downside risks to the outlook.

Budget Outlook

Budget 2018 projects surpluses of:

  • $219 million in 2018-19
  • $281 million in 2019-20
  • $284 million in 2020-21

Government has included several layers of prudence into the fiscal plan, to help account for lower-than-expected revenues, unforeseen expenses or emergencies. Budget 2018 includes a forecast allowance of $350 million in 2018-19, $500 million in 2019-20 and $600 million in 2020-21. Budget 2018 also includes contingencies of $550 million in 2018-19, $750 million in 2019-2020 and $750 million in 2020-21.

Revenue Outlook

Total government revenue is forecast at $54.2 billion in 2018-19, $57.6 billion in 2019-20 and $58.6 billion in 2020-21.

Expense Outlook

Total expenses over the three-year fiscal plan are forecast at $53.6 billion in 2018-19, $56.8 billion in 2019-20 and $57.8 billion in 2020-21.

Capital Spending

Taxpayer-supported capital spending over the fiscal plan will total a record-level $15.8 billion, and includes urgently needed investments in critical infrastructure, such as:

  • Education: $2 billion to maintain, replace, renovate or expand K-12 facilities.
  • Post-secondary education: $2.6 billion to build capacity and help meet the province’s future workforce needs in areas like science, trades and technology.
  • Health: $3.1 billion to support major construction projects and upgrading health facilities, medical and diagnostic equipment, and information management technology systems.
  • Housing: $379 million to preserve existing affordable housing and to help fund the construction of supportive housing units.
  • Student housing: $450 million for a student housing program for public post-secondary institutions that will help finance 5,000 new student housing beds.
  • Transportation: $4 billion in provincial operating and capital funding, which will leverage an additional $1.3 billion through federal cost sharing and partnerships with private organizations, local governments and other agencies.

Debt Affordability

The operating debt is forecast to be eliminated by the end of 2018-19, one year earlier than forecast in Budget 2017 Update. Primarily, this is a result of stronger-than-predicted economic growth in 2017. This will be the first time the government has been free of operating debt in over 40 years.  

The taxpayer-supported debt-to-GDP ratio, a key indicator used by credit-rating agencies, is expected to remain below 16% over the fiscal plan period, despite record-level capital spending.

Eliminating Medical Services Plan premiums

Budget 2018 will eliminate Medical Services Plan (MSP) premiums, effective Jan. 1, 2020.

By eliminating these unfair and regressive fees, the B.C. government will help lift a significant financial burden off individuals and families. Eliminating MSP premiums will save individuals up to $900 per year and will save families up to $1,800 per year.

MSP premiums disproportionally affect low- and middle-income earners. Currently, all households with adjusted net income of more than $42,000 per year pay the same amount. This means a person earning $45,000 per year pays the same premiums as someone earning $250,000 per year. Eliminating this regressive fee for all British Columbians will result in a fairer tax system that works for everyone.

British Columbia is the only province in Canada that levies MSP premiums. They are complex and expensive for businesses to administer. They also lead to substantial administrative costs for government.

The B.C. government committed to eliminating MSP premiums within four years. The government took the first step in Budget 2017 Update by cutting MSP premiums by 50%, starting Jan. 1, 2018, and increasing the threshold for premium assistance by $2,000.

The decision to eliminate MSP premiums was informed by the MSP task force’s interim report, including the decision to eliminate premiums all at once, as opposed to phasing them out over time, and to provide advance notice of the changes.

In order to continue to deliver the services British Columbians depend on, the Province is replacing the revenues from MSP premiums with an employer health tax.

This new payroll tax will come into effect Jan. 1, 2019, with the following rate structure:

  • Businesses with a payroll of more than $1.5 million, will pay a rate of 1.95% on their total payroll.
  • Businesses with a payroll between $500,000 and $1.5 million, will pay a reduced tax rate.
  • Businesses with a payroll under $500,000 will not pay the tax.

By exempting businesses with payrolls under $500,000, the employer health tax is designed to help protect small businesses. At 1.95%, it is the lowest rate among provinces with a payroll tax in Canada.

Further details about the employer health tax will be provided prior to its implementation on Jan. 1, 2019.

The Province estimates the new tax will raise approximately $463 million in 2018-19. The B.C. government will use this revenue to help people by investing in services and the economy.

Quick Facts:

  • In 2016-17, MSP premiums provided a total of $2.6 billion in revenue.
  • The new employer health tax is estimated to provide $1.9 billion in revenue per year in 2019-20 and 2020-21.

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