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Thomas Storring Director of Economics/Statistics
Tel: 902-424-2410Email: Thomas.Storring@novascotia.ca

February 21, 2018
BRITISH COLUMBIA BUDGET 2018-19

British Columbia has tabled its 2018-19 provincial budget. 

The government expects to end the 2017-18 fiscal year with a surplus of $151 million as rising revenues from stronger economic growth were largely offset by substantial losses at the Insurance Corporation of British Columbia (a combination of higher crash rates, injury claims, complexity of cases and lower investment earnings). 

In the next three fiscal years, British Columbia expects there to be ongoing losses at ICBC, with offsetting reforms to the insurance product offering. The government is projecting surpluses in each of the next three years, starting at $219 million in 2018-19 and rising to over $280 million in each of the next two years.  

The British Columbia fiscal plan also makes an allowance for forecast contingencies: $350 million in 2018-19, $500 million in 2019-20 and $600 million in 2020-21.  The Budget further notes additional contingencies of $550 million in the next year.  

                                                                                   

Outside of provisions for ICBC and forecast contingencies, the British Columbia budget anticipates that revenues will grow at an annual rate of 3.1 per cent while expenditures will grow by 3.7 per cent

Although higher than expected economic growth has raised revenues compared with the previous year's fiscal plan. there have also been increases in expenditures for new programs.  The effects of the ICBC losses and offsetting product reforms are integrated with revenues shown below.  

The size of the British Columbia government relative to the overall economy is expected to remain stable over the next three fiscal years with revenues between 18.6 per cent and 19.0 per cent of GDP while expenditures are between 18.4 per cent and 18.7 per cent of GDP.  British Columbia's projected surpluses are below 0.1 per cent of GDP in each of the next three fiscal years.

British Columbia's economy exceeded anticipated growth for 2016 while current estimates for 2017 are also above last year's expectations.  British Columbia's employment growth, exports and retail sales have all exceeded expectations.  The unemployment rate remains at or near historic lows and the pace of housing starts is at an all time high.  The British Columbia Budget projects that economic growth with slow in 2018 as rapid growth of residential investment and employment cannot be sustained over multiple years, though export growth is expected to continue at a higher pace.  Over the medium term British Columbia's economy is expected to return to near its trend rate of growth (2.0 per cent real, 4.0 per cent nominal).   

Key Measures and Initiatives

The British Columbia Budget establishes new directions and priorities:

  • Moving towards universal child care with: reducing child care fees by up to $350 for each space per month, introducing an affordable child care benefit of up to $1,250 per child per month, creating 22,000 new child care spaces, increasing funding for certifying/training early childhood educators
  • Improving housing affordability: new 'speculators' tax on non-resident property owners and owners of vacant housing units (offset by up-front exemptions or an income tax credit for resident taxfilers), increasing property transfer tax rate (aka: foreign buyers' tax) to 20 per cent, greater information requirements on pre-sales assignments and beneficial ownership, higher property taxes on more expensive properties, building 34,000 new housing units over 10 years, boosting rental assistance programs
  • Eliminating all Medical Services Plan premiums by January 1, 2020 (premiums had been reduced by 50% in the fall update), with revenues replaced by an Employer Health Tax on payrolls (reduced/zero rates for companies with smaller payrolls).
  • On April 1, 2018 raising the carbon tax rate by $5/tonne of CO2 and increasing it each year to reach $50/tonne by April 2021.
  • Increasing tobacco taxes from 24.7 cents/unit to 27.5 cents/unit (and to 37.5 cents/gram of loose tobacco) on April 1, 2018
  • Enabling online accommodation platforms to register as tax collectors
  • Raising taxes on luxury vehicles in excess of $125,000  
  • Reducing fares on non-major ferry routes and freezing fares on major ferry routes.

British Columbia Budget 2018-19



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