Ministry of Finance and Corporate Relations	A Three-Year Plan: — stimulate the economy — make B.C. more competitive — attract investment — create jobs Meeting the challenge together

Message from Minister of Finance Joy K. MacPhail Budget '98 presents a three-year plan to stimulate the B.C. economy, encourage investment and create new jobs. We're cutting taxes for businesses, families and individuals. We're giving small business a break. We're cutting red tape and creating a positive climate for business. We're sending a strong signal to investors -- we're making B.C. competitive. We consulted closely with B.C. business, labour and communities. The result is a three-year plan that builds on British Columbia's strengths and charts new directions for our traditional industries and for the new knowledge-based economy. B.C. has led the country in job creation for most of the decade. This budget helps meet the challenges we face today. At the same time, we will improve our financial position, reduce the deficit as we have done every year since 1991, and move toward a balanced budget. Working together, we will move forward to a more prosperous future in all parts of the province. I am pleased to present this plan to all British Columbians. Joy K. MacPhail Minister

A THREE-YEAR PLAN TO STIMULATE THE ECONOMY, ENCOURAGE INVESTMENT AND CREATE JOBS To stimulate growth, encourage investment, increase competitiveness and create jobs, we have consulted widely and prepared a plan which: cuts taxes to stimulate the economy cuts red tape gives small business a break helps revitalize B.C.'s traditional industries supports the new economy moves government to a balanced budget and limits taxpayer-supported debt.   TAX CUTS Over the next three years, tax cuts totalling $415 million annually will stimulate new investment and job creation. These are in addition to more than $800 million in tax reductions and rate freezes since 1995. Budget '98 Tax Reductions ($ millions) Personal Income Tax   Reduce personal income tax rate by 2% to 49.5% effective January 1, 1999 and reduce the top marginal rate from 54.2% to 49.9% over three years 266 Small Business   Increase the capital tax exemption from $1.5 million to $5.0 million over three years 46   Reduce the small business tax rate from 9% to 8% over two years 20 Other Reductions   Film, farming, mining, oil and gas, aviation and telecommunications 83         Total $415   CUTTING RED TAPE We will cut red tape in B.C. -- the relationship between individual companies and government has become complex and inefficient: a task force will report on ways to cut red tape and reduce business costs legislation will streamline approvals, eliminate duplication, allow electronic filing and simplify approval processes regulatory streamlining will be introduced for the forestry, mining, and oil and gas sectors.   SUPPORTING SMALL BUSINESS Small business creates most new jobs and provides many first jobs for young people. The plan supports small business by cutting taxes and streamlining regulation: corporation capital tax eliminated for 10,000 small businesses over three years; by 2001, 90% will not pay CCT small business corporate income tax cut 11% over two years to lowest rate since 1986 for 40,000 businesses. This builds on the 1996 small business income tax cut of 10 per cent and the two-year tax holiday.   REVITALIZING TRADITIONAL INDUSTRIES The plan will help our traditional industries stay competitive and continue their key role in B.C.'s economy. Initiatives are being developed to cut costs and spur new investment: Forestry -- By July 1, stumpage reductions and regulatory changes will cut costs substantially and generate investment without eroding environmental standards. Oil and Gas -- New incentives and regulatory changes will follow the Premier's Oil and Gas Initiative to stimulate investment in exploration and development. Mining -- Government is working with industry to improve security of access, develop a new exploration code and cut red tape. Agriculture -- Funding is earmarked to help farmers recover from weather-related crop failures. Effective June 1, the fuel tax will be eliminated for farmers.   SUPPORTING THE NEW ECONOMY B.C.'s "new economy" such as knowledge-based industries and film and TV production is growing rapidly, based on B.C.'s highly skilled people and our attractive quality of life. The plan includes: expanded access to training and education through extention of the tuition fee freeze and 2,900 new post-secondary spaces financial incentives for domestic and foreign film productions in B.C. top marginal income tax rate cut from 54.2 per cent to 49.9 per cent over three years to help retain highly skilled people increased tourist marketing by Tourism B.C. 50 per cent cut in international jet fuel tax over two years to improve B.C.'s position as a gateway to the Pacific Rim.   CREATING A POSITIVE BUSINESS CLIMATE Government has consulted widely in preparing the three-year plan and consultation will continue: the Premier's Advisory Council will expand its role as a high-level group, meeting semi-annually on the state and direction of the economy a Business Advocate will be appointed to help companies work with government TEAM BC trade missions will be developed to provide a joint approach to international marketing.   SOUND FINANCIAL MANAGEMENT Government's 1997/98 fiscal and debt management targets were met or exceeded. The three-year financial plan will see: deficit for 98/99 will be halved to $95 million balanced budget projected for 1999/2000 and a surplus in 2000/01 health and education will be protected while other government programs and overheads have been cut by five per cent this year and further overhead reductions will occur debt-to-GDP ratio will be managed within a range of 19% - 22% and will continue to be among the lowest in Canada.   FOR MORE INFORMATION, CONTACT: Ministry of Finance and Corporate Relations Communications Branch 109 – 617 Government Street, Victoria, B.C. V8V 1X4 Fax: (250) 356-2822 INTERNET: http://www.fin.gov.bc.ca

CONTENTS FOR BUDGET ’98 BC Ministry of Finance and Corporate Relations If you have questions or comments about content please contact: Communications Branch