Press Release | BC Budget 2020
“BC Budget 2020 continues the government’s focus on affordability, but lacks a sorely needed ‘competitive business strategy’ for the province” – Michael Hind, CEO of the Tri-Cities Chamber of Commerce.
The 2020 BC Budget, released yesterday afternoon, February 18th, continues the provincial government’s laudable investments in affordability, but lacks a defined provincial competitiveness strategy to help the business sector that is being left to foot a large part of that bill. Since the government’s Budget 2017 update, we have seen BC’s tax competitiveness decline with:
- The corporate tax rate increasing from 11% to 12%
- Carbon tax still increasing $5/tonne per year on its way to $50 per tonne by 2021.
- The Employer’s Health Tax set to cost businesses and other organizations $1.9 billion this fiscal year, and over $2 billion by 2022/23.
- The speculation and vacancy tax in the Lower Mainland, Capital Region District, Nanaimo region, and the Kelowna/West Kelowna area.
Businesses have also been dealing with other tax burdens such as commercial property tax increases due to the “highest and best use” standard.
Despite that, the Tri-Cities Chamber recognizes positive measures such as the enhanced BC Child Opportunity Benefit that will put more money back into the pockets of families. The government is also investing an additional $419 million for Clean BC initiatives over the next 4 years including for energy efficiency retrofits in schools and hospitals, and continues its support for the 10-year Homes for BC plan that will build affordable homes for low and middle-income families. On the labour front, the new BC Access Grant together with the Canada Access Grant will give up to $4,000 to students looking to complete a degree, diploma or certificate.
The 2020 Budget remains balanced with forecasted revenues continuing to grow at a steady pace, though largely funded by tax increases to business. Provincial economic calculations have baked in a good amount of fiscal prudence to give the budget a cushion in case of a slowdown in the economy. The provincial surplus for 2019/20 remains a modest $203 million with an estimated surplus for 2020/21 at $227 million. The budget contains Forecast Allowances of $300 million and a contingency of $600 million for 2020.
The Chamber network continues to monitor BC’s debt projections. Taxpayer supported debt-to-GDP continues to increase due to capital investments in transportation, education, and health infrastructure. $9.2 billion over 5 years is going to trade, highway, and transit infrastructure projects. The provincial debt-to-GDP ratio is still at a strong 14.6% but is projected to climb slightly to 17.1% in 2022/23. Meanwhile, taxpayer supported debt-to-revenue – a key metric in determining provincial credit ratings – is at 77.9% and trending higher to 94.4% by 2022/23. This level is acceptable assuming revenue projections materialize, but any slowdown in the economy could see that number begin to impact our credit rating.
The Tri-Cities Chamber welcomes continued affordability investments in health, education, childcare, and housing but are disappointed to see a lack of corresponding improvements to provincial competitiveness. Cost of doing business remains a problem for our members as does growing issues in finding labour. Energy intensive, trade exposed businesses are not receiving adequate support as the province shifts towards a lower carbon economy. Overall, the tax burden on businesses will cause growth and hiring to slow, and BC’s deteriorating tax competitiveness will discourage investment in the province over the long term.
The Tri-Cities Chamber of Commerce is a proactive network of business-minded individuals that are committed to acting as an accessible, visible, supportive and reciprocal resource to our members and the Tri-Cities at large, communicating their collective voice to help shape a prosperous business community.
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