Ministry of Finance and Corporate Relations Honourable Paul Ramsey, Minister	This electronic version is for informational purposes only. The printed version remains the official version.

Report D: TAX EXPENDITURES

TABLE D1
SOCIAL AND INCOME TRANSFER PROGRAMS

TAX EXPENDITURE						1999/00 Estimated Cost
PROVINCIAL SALES TAX						($ millions)
Exemptions for the following items:
		Food (basic groceries, snack foods, candies, soft drinks and restaurant meals)				716
		Residential fuels (electricity, natural gas, fuel oil, etc.)				110
		Prescription and non-prescription drugs, vitamins and certain other health care products and appliances				62
		Children's clothing and footwear				21
		Clothing patterns, fabrics and notions				6
		Specified school supplies1				40
		Books, magazines and newspapers				53
		Basic telephone and cable service				52
		"1-800" and equivalent telephone services				7
		Exempt safety equipment				8
		Labour to repair major household appliances, clothing and footwear				6
		Miscellaneous consumer exemptions (e.g. used clothing under $100)				3
PERSONAL INCOME TAX
Provincial Measures
	BC Family Bonus2					103
	Sales tax credit					42
	Political contributions tax credit					2
Federal Measures3
	Deduction and inclusion of alimony and child support payments					17
	Charitable donations tax credit					105
	Tax credits for tuition and education4					74
	Tax credits for disabilities and medical expenses					47
	Pension income tax credit					27
	Credit for persons older than 65 years					107
	Exemption from capital gains up to $500,000 for small businesses and family farms					74
	Deduction for residents of northern and isolated areas					10
	Non-taxation of employer-paid insurance premiums for group private health and welfare plans					123
	Registered Retirement Savings Plans:5
			exemption for	— contributions	641
				— investment earnings	331
			taxation of	— withdrawals	(225)
			Total			747
	Registered Pension Plans:5
			exemption for	— contributions	359
				— investment earnings	574
			taxation of	— withdrawals	(435)
			Total			498
CORPORATION INCOME TAX6
	Charitable donations deduction					6
SCHOOL AND RURAL AREA PROPERTY TAXATION7
	Home owner grant					490
	Exemption for places of worship					9
	Municipal discretionary exemptions					15
PROPERTY TRANSFER TAX
	Exemption for first-time home buyers					30
	Exemptions for the following items:
		Property transfers between related individuals				25
		Property transfers to municipalities, regional districts, hospital districts, library boards, school boards, water districts and educational institutions				4
		Property transfers to charities registered under the Income Tax Act (Canada)				2
1 Adjusted from last year to include eligible educational institutions. 2 The above estimate of $103 million represents the tax expenditure portion of the program's cost. The tax expenditure portion represents family bonus payments that effectively reduce the recipient's personal income tax. The remaining cost of the program, including recoveries and administration costs, of $184 million for 1999/00, is presented in the BC Family Bonus Vote because it represents payments to families which exceed their provincial income tax liabilities. 3 The estimates show provincial revenue losses only. They are based on estimates of projected federal losses contained in Government of Canada: Tax Expenditures, 1999. British Columbia personal income tax expenditures for the federal measures are estimated by applying British Columbia's share of basic federal tax to the federal estimates for the relevant period and then applying the relevant provincial tax rates. (Prior to 1997, federal tax expenditure reports did not include projections; previous estimates of provincial revenue losses were based on historical federal estimates.) Certain tax expenditure items have been excluded where no data were available or the amounts were immaterial. 4 The estimate includes the total provincial revenue losses from the federal tuition fee credit, education credit, student loan interest credit, and the carry-forward and transfer of tuition fee and education credits. 5 Registered retirement savings plans and registered pension plans are treated in the same way as in the federal tax expenditure report. The tax expenditure associated with these schemes is presented as the amount of tax that would otherwise be paid in the year of deferral, were the deferral not available. However, this type of estimate overstates the true costs of these preferences because taxes are eventually paid, including tax on investment earnings. An estimate that does not overstate these costs would, however, be difficult to develop and would require some largely speculative assumptions. 6 The deduction offered for corporate charitable donations is a federal measure, but the estimate shows only the provincial revenue loss. This is calculated from the federal revenue loss by applying British Columbia's share of corporate taxable income and the relevant tax rates to the federal estimate. 7 The property tax estimates are for the 1999 calendar year, and include only school and rural area property taxes levied by the province.