Impact of the 10-Point Plan on British Columbia's Economy

INCOME TAX ACT

Personal Income Tax Rates Reduced

The bottom two provincial personal income tax rates are reduced effective for the 2008 and subsequent tax years.  This change advances the legislated tax rate reductions for the first two tax brackets to January 1, 2008 from January 1, 2009.

The rate reductions will result in a tax cut for all taxpayers of about 3 per cent in 2008 on income in the first two tax brackets, up to about $70,000 in taxable income. 

Table 2 shows the provincial personal income tax rates for 2008 and subsequent tax years.

 Table 2   B.C. Personal Income Tax Brackets and Rates

 

 

 

Tax rates - 2008 and subsequent years

 

 

 

 

After changes

 

Tax bracket

Taxable income range*

Prior to changes

 

2008

 

1

$1 to $35,016

5.24%

 

5.06%

 

2

$35,016.01 to $70,033

7.98%

 

7.70%

 

3

$70,033.01 to $80,406

10.50%

 

10.50%

 

4

$80,406.01 to $97,636

12.29%

 

12.29%

 

5

Over $97,636

14.70%

 

14.70%

 

* Brackets are indexed to provincial inflation.

 

 

 

 

Table 3 shows the impact of the tax rate changes to British Columbia personal income taxes payable by a single individual with wage income and claiming basic credits only.

Table 3   B.C. Tax Cut – Impact on Taxpayers*

 

 

2008 BC tax

Reduction in tax for 2008

Percentage

Taxable Income

before tax cuts

2% tax cut**

 

3% tax cut***

Total reduction

change in tax

 

 

 

 

 

 

 

$20,000

$233

$11

 

$17

$28

12%

$30,000

$1,015

$20

 

$35

$55

5%

$40,000

$1,654

$34

 

$56

$90

5%

$50,000

$2,455

$51

 

$83

$134

5%

$60,000

$3,270

$68

 

$111

$179

5%

$70,000

$4,085

$85

 

$139

$224

5%

$80,000

$5,134

$85

 

$139

$224

4%

$100,000

$7,642

$85

 

$139

$224

3%

$120,000

$10,582

$85

 

$139

$224

2%

$150,000

$14,992

$85

 

$139

$224

1%

 

 

 

 

 

 

 

* Calculated for a single taxpayer with wage income and claiming basic credits.

** Announced in Budget 2008.

*** Announced in the October Update on October 22, 2008.

The tax rate reductions build on the personal income tax cuts the government has introduced since 2001. These tax cuts include the 25 per cent tax cut in 2001, the BC Tax Reduction in 2005, the 10 per cent tax cut in 2007 and the reductions announced in this year’s budget as part of the revenue neutral carbon tax plan. Table 4 shows the impact of these changes by comparing BC taxes payable using rates in effect prior to the changes in 2001 and after the rates are cut for 2008.

 Table 4   British Columbia Personal Income Taxes Payable 

Before 2001 and After 2008 Tax Cuts*

Taxable Income

BC tax before
2001 tax
cuts

BC tax after
October 2008
update

Reduction
in BC tax

 

Percentage
change in BC
tax

 

 

 

 

 

 

$15,000

$419

$0

$419

 

-100%

$20,000

$810

$205

$605

 

-75%

$30,000

$1,594

$960

$634

 

-40%

$40,000

$2,553

$1,564

$989

 

-39%

$50,000

$3,721

$2,321

$1,400

 

-38%

$60,000

$4,911

$3,091

$1,820

 

-37%

$70,000

$6,101

$3,861

$2,240

 

-37%

$80,000

$7,769

$4,910

$2,859

 

-37%

$100,000

$11,525

$7,418

$4,107

 

-36%

$120,000

$15,465

$10,358

$5,107

 

-33%

$150,000

$21,375

$14,768

$6,607

 

-31%

*Taxes are calculated for a single wage earner claiming basic credits and using 2008 credit amounts and tax bracket thresholds.  Taxes before tax cuts are calculated using tax rates in place prior to the 25 per cent tax cut in 2001.  Taxes after tax cuts are calculated using 2008 tax rates as announced on October 22, 2008.

 

 

 

 

 

 

 

                                     

                                     

 





 

Small Business Corporate Tax Rate Reduced

The small business corporate income tax rate is reduced to 2.5 per cent from 3.5 per cent effective December 1, 2008.  In recognition of the importance of small business to the economy, the small business tax rate has been reduced over 44 per cent since 2001.   

SOCIAL SERVICES TAX ACT AND HOTEL ROOM TAX ACT

Commission Rates

The allowances paid to businesses for collecting and forwarding provincial sales tax and hotel room tax to the province is doubled effective for the November returns.  The maximum monthly commission is increased to $198 per month from $99 per month. This makes British Columbia’s maximum commission the highest in Canada. 

SCHOOL ACT

Property Tax Credit of 50 per cent of School Property Taxes for Class 4 and Class 5 properties

Effective for the 2009 taxation year, a credit of 50 per cent of provincial school property tax payable on major industrial (Class 4) and light industrial (Class 5) property is provided.

This credit will provide a tax reduction of $50 million annually to British Columbia manufacturing, mining, forestry and other major and light industries. The industrial property tax credit will help keep British Columbia’s crucial industries strong, competitive and providing jobs. It will help some of B.C.’s oldest and largest employers, especially in rural and northern communities, to reinvest and maintain jobs. 

FERRIES

Fare Reduction and Schedule Restoration

Effective for December 2008 and January 2009 B.C. Ferry fares are reduced and ferry schedules previously eliminated are restored.

SUMMARY OF FISCAL IMPACT of OCT. 22, 2008 MEASURES      (Fiscal Impact ... $ millions)

 
Effective Date
2008/09
2009/10
2010/11
    
Income Tax Act            
  • Reduce each of the bottom two personal income tax rates by 3 per cent for 2008
Jan. 1, 2008
(144)
-
-
  
(144)
  • Reduce corporate income tax small business tax rate to 2.5 per cent from 3.5 per cent effective December 1, 2008
Dec. 1, 2008
(14)
(92)
(40)
  
(146)
School Act            
  • Introduce a property tax credit of 50 per cent of school property taxes for class 4 and class 5 properties
2009 tax year
(13)
(50)
(52)
  
(115)
Social Service Tax Act and Hotel Room Tax            
  • Double remittance commission
Nov. 2008 returns
(10)
(25)
(25)
  
(60)
Ferry Enhancements            
  • Temporary 33 per cent ferry fare reduction and schedule restoration
Dec. 2008
(20)
-
-
  
(20)
TOTAL
(201)
(167)
(117)
  
(485)