B.C. Government unveils 10% tax-cut budget

By
Real Estate Sales Representative with RE/MAX Camosun Victoria BC Real Estate BC Licence #001159
VICTORIA, British Columbia -- British Columbia unveiled a $36.2 billion budget on Tuesday that includes a 10% personal income tax cut, which the government said was aimed at easing housing problems caused partly by the western Canadian province's strong economy. British Columbia, which has benefited from strong commodity prices and a real estate boom in the Vancouver area, also said it expects to end its current fiscal year with a surplus of $2.8 billion, but forecast the economy to grow a bit less vigorously through the rest of the year.

The budget for the 2007-08 fiscal year, which begins at the end of March, projects total revenue of $37.4 billion, which would leave a surplus of $400 million after $750 million is set aside as a contingency. Capital spending is projected to be $5.1 billion, up from $4.5 billion in the last budget.The right-of-center B.C. Liberal Party government of Premier Gordon Campbell has been accusing of cutting social programs in past years as it emphasized fiscal constraint and tax relief, which it said were needed to rebuild the province's economy -- which is now booming."There are too many families who don't feel like they are sharing in the benefits," Finance Minister Carole Taylor said.

Taylor said the province would put an additional $2 billion toward helping homeowners, low-income renters and the homeless over the next four years, but later acknowledged that $1.5 billion of that would come in the form of lower income taxes.New spending includes $27 million to open 300 year-round shelter beds for the homeless, and $38 million for people at risk of becoming homeless. There was also aid for people buy their first home in a real estate market that saw property values jump 24% last year.There was little new environmental spending, despite Campbell's announcement last week that the province plans to cut greenhouse gas emissions by 33% by 2020. Taylor said those plans were still being worked out.

ECONOMY TO GROW, BUT SLOWER Provincial officials said British Columbia had a real GDP growth of 3.9% in 2006, but forecast it to slow to 3.1% percent in 2007 and 3% in 2008.British Columbia supplies about half of the Canadian softwood construction lumber exported to the United States each year, but officials did not expect a quick rebound in U.S. housing starts. They estimate starts will be down 23% in 2007 from the year before.The Canadian dollar is projected to average at 86.9 U.S. cents in 2007, and climb to 88.1 cents in 2008.

Total debt, including that of provincially owned corporations, is expected to be $36.8 billion, up from $34.3 billion last year. The tax supported debt-to-GDP ratio is projected to be 14.8%, down from the 15.8% projected in last year's budget."We are committed to not letting our debt grow faster than the economy," Taylor said.

Jim Sinclair of the B.C. Federation of Labor said calling an income tax cut "housing aid" would do nothing to ease a homeless problem that has people sleeping on the streets of Vancouver.

"That's insulting," Sinclair said.

ock Finlayson of the Business Council of British Columbia said the tax cut was welcome, although his group would have liked more tax relief for industry.

The Sierra Club said the government missed a chance to follow through on Campbell's environmental plans.

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