Budget 97: Reports -- Table E1

The following electronic version is for
informational purposes only.
The printed version remains the official version.

BUDGET 97: REPORTS
Ministry of Finance and Corporate Relations
Province of British Columbia

TABLE E1
SOCIAL AND INCOME TRANSFER PROGRAMS
TAX EXPENDITURE
			1996/97 Estimated Cost
			($ millions)
PROVINCIAL SALES TAX
Exemptions for the following items: Food (basic groceries, snack foods, candies, soft drinks and restaurant meals) Residential fuels (electricity, natural gas, fuel oil, etc.) Prescription and non-prescription drugs, vitamins and certain other health care products and appliances Children's clothing and footwear Clothing patterns, fabrics and notions Specified school supplies Books, magazines and newspapers Basic telephone and cable service Exempt safety equipment Labour to repair major household appliances, clothing and footwear Miscellaneous consumer exemptions (e.g., used clothing under $100)			550 110 58 26 7 10 52 35 8 6 3
PERSONAL INCOME TAX
Provincial Measures
	BC Family Bonus ¹		87
	Sales tax credit ²		46
	Political contributions tax credit		4
Federal Measures ³
	Deduction and inclusion of alimony and child support payments		19
	Charitable donations tax credit		80
	Tax credits for tuition and education		36
	Tax credits for disabilities and medical expenses		47
	Pension income tax credit		27
	Credit for persons older than 65 years		94
	Exemption from capital gains up to $500,000 for small businesses and family farms		137
	Tax deduction for residents of northern and isolated areas		15
	Non-taxation of employer-paid insurance premiums for group private health and welfare plans		105
	Registered Retirement Savings Plans: ⁴
	exemption for -- contributions	381
	-- investment earnings	291
	taxation of -- withdrawals	(81)
	Total		591
	Registered Pension Plans: ⁴
	exemption for -- contributions	455
	-- investment earnings	753
	taxation of -- withdrawals	(431)
	Total		777
CORPORATION INCOME TAX ⁵
	Charitable donations deduction		8
SCHOOL AND RURAL AREA PROPERTY TAXATION ⁶
	Home owner grant		449
	Exemption for places of worship		8
	Municipal discretionary exemptions		15
PROPERTY TRANSFER TAX
	Exemption for first-time home buyers		36
Exemptions for the following items: Property transfers between related individuals Property transfers to municipalities, regional districts, hospital districts, library boards, school boards, water districts and educational institutions Property transfers to charities registered under the Income Tax Act (Canada)			30 5 1

1 The BC Family Bonus was in effect for only nine months in fiscal 1996/97. The above estimate of $87 million represents the tax expenditure portion of the program's cost. The remaining cost of the program, including recoveries and administration costs, $205 million for 1996/97, is presented in the BC Benefits Vote.

2 The sales tax credit amounts for children were eliminated with the introduction of the BC Family Bonus for the 1996 and subsequent tax years. This change has reduced the annual cost of the sales tax credit by $16 million.

3 The estimates show provincial revenue losses only. They are based on estimates of the federal losses contained in Government of Canada: Tax Expenditures, 1995. The federal estimates are based on 1992 and 1993 personal incomes and 1992 corporation incomes. British Columbia personal income tax expenditures for the federal measures are estimated by adjusting the federal estimates to 1996/97 levels using the growth in basic federal tax and adjustments for federal budget measures, applying British Columbia's share of basic federal tax to the adjusted estimates, and finally applying British Columbia's average tax rate. Certain tax expenditure items have been excluded where no data were available or the amounts are immaterial.

4 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.

5 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 grossing-up the 1992 federal estimate to 1996/97 levels, taking into account the growth in corporate taxable incomes, and then applying British Columbia's share of corporate taxable income and the relevant tax rates to the grossed-up estimates.

6 The property tax estimates, except for the home owner grant amount, are for the 1996 calendar year, and include only school and rural area property taxes levied by the province.

Budget 97 Reports

BC Budget 97

BC Ministry of Finance and Corporate Relations

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1	The BC Family Bonus was in effect for only nine months in fiscal 1996/97. The above estimate of $87 million represents the tax expenditure portion of the program's cost. The remaining cost of the program, including recoveries and administration costs, $205 million for 1996/97, is presented in the BC Benefits Vote.
2	The sales tax credit amounts for children were eliminated with the introduction of the BC Family Bonus for the 1996 and subsequent tax years. This change has reduced the annual cost of the sales tax credit by $16 million.
3	The estimates show provincial revenue losses only. They are based on estimates of the federal losses contained in Government of Canada: Tax Expenditures, 1995. The federal estimates are based on 1992 and 1993 personal incomes and 1992 corporation incomes. British Columbia personal income tax expenditures for the federal measures are estimated by adjusting the federal estimates to 1996/97 levels using the growth in basic federal tax and adjustments for federal budget measures, applying British Columbia's share of basic federal tax to the adjusted estimates, and finally applying British Columbia's average tax rate. Certain tax expenditure items have been excluded where no data were available or the amounts are immaterial.
4	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.
5	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 grossing-up the 1992 federal estimate to 1996/97 levels, taking into account the growth in corporate taxable incomes, and then applying British Columbia's share of corporate taxable income and the relevant tax rates to the grossed-up estimates.
6	The property tax estimates, except for the home owner grant amount, are for the 1996 calendar year, and include only school and rural area property taxes levied by the province.