Ministry of Finance and Corporate Relations Communications Branch 109 – 617 Government Street Victoria, B.C. V8V 1X4 Phone: (250) 356-5975 Internet: http://www.fin.gov.bc.ca

BUDGET ’98 CUTS TAXES AND RED TAPE TO STIMULATE B.C. ECONOMY, ENCOURAGE INVESTMENT AND CREATE JOBS
For immediate release March 30, 1998	10/98
VICTORIA -- The 1998 provincial budget announced today by Finance Minister Joy MacPhail presents a three-year plan to stimulate the B.C. economy, increase competitiveness, encourage investment and create new jobs. "We have consulted widely," said MacPhail. "To boost our economy, we're cutting taxes for businesses, families and individuals. We're cutting red tape, giving small business a break, strengthening the new knowledge-based economy and revitalizing B.C.'s traditional industries." The budget cuts taxes for 40,000 small businesses; 90 per cent of businesses will pay no corporation capital tax by 2001. Personal income tax rates are cut by two per cent and the top marginal tax rate will be lowered over three years from 54.2% to 49.9%. A B.C. Hydro rate rebate gives money back to businesses and households. Other provincial taxes and fees are reduced or frozen. "We want to make it easier to do business so that business can create jobs," MacPhail said. "We know that red tape and over-regulation have increased business costs and made B.C. less competitive. We are determined to improve the way we work with business." Tax reductions announced today total $95 million this year and $415 million when fully implemented over the next three years. Additional incentives, tax reductions and regulatory reform will be announced shortly for B.C.'s forestry, mining, and oil and gas industries. "This is a significant stimulus for investment, jobs and competitiveness -- and one we can afford" MacPhail said. "We are protecting the priorities of education, health and families, cutting government overhead and moving to a balanced budget."   Tax reductions to stimulate investment and support small business Income taxes for small business cut by 11%; Corporation capital tax is eliminated for 10,000 small businesses; By 2001, over 90% of B.C. businesses will not pay corporation capital tax; Personal income taxes reduced by two per cent; The marginal tax rate will be cut over three years from 54.2% to 49.9%; B.C. Hydro rate rebate on 1997 electricity bill of two per cent for residential and small commercial customers, one per cent for large commercial and industrial customers; International jet fuel tax reduced by 50% over two years to improve B.C.'s position as a gateway to the Pacific Rim; and Farm fuel tax eliminated.   Cutting red tape and creating a positive business climate To help businesses work with government, a Business Advocate and Small Business Task Force will propose ways to streamline regulatory processes, prune red tape, improve competitiveness, attract investment and create jobs in B.C. Legislation will be introduced to cut red tape by streamlining filing and registration requirements, eliminating duplication, increasing one-stop access and simplifying approval processes.   Revitalizing traditional industries "Forestry, mining, and oil and gas will continue to play a big part in our province's economy," MacPhail said. "We are working with each of these industries to improve competitiveness and provide incentives for investment." Forest industry costs will be cut through stumpage reductions and by simplifying the regulatory framework to generate investment and jobs in forest communities. B.C.'s mining industry gains better access to lands for exploration and greater mineral tenure certainty. Incentives for exploration and development in the oil and gas sector are to be announced shortly. The Agriculture Ministry's budget has been increased to help farmers recover from weather-related crop failures in the Peace River, Okanagan, Lower Mainland and Vancouver Island regions and the fuel-tax has been dropped for farmers.   Strengthening the new economy B.C.'s new economy such as high-tech, knowledge-based industries, film and TV production is growing rapidly, based on highly skilled people, and high quality of life. "To help B.C. companies keep and attract qualified people, we will lower the top marginal income tax rate to 49.9% from 54.2%," said MacPhail. The $15 million Film Incentive BC, announced in October, will help home grown productions and film locations outside the Lower Mainland. Assistance for foreign film production will be announced shortly. The sales tax on 1-800 phone services is eliminated May 1 to create more jobs in the telecommunications sector.   Investments in infrastructure Budget '98 provides $1.25 billion for schools, hospitals, roads and transportation projects -- an increase of $275 million. "Capital investment by the province will create an estimated 16,000 jobs in design and construction throughout B.C.," MacPhail said. "It is crucial that we continue to modernize our infrastructure so that we can compete internationally and build a strong economy with new jobs."   More spending power for individuals and families B.C. personal income tax rates are reduced by two per cent. This will be the fourth year in a row that the province has cut taxes for low- and middle-income families. All provincial tax rates for families and individuals remain frozen. ICBC premiums and university tuition fees also stay frozen. The BC Family Bonus, introduced by this government in 1996, continues to provide financial relief for 230,000 BC families. The province will cut the cost of Medical Services Plan premiums by up to $172 for 80,000 British Columbians with modest incomes. "All of these measures together mean that by next year the disposable income of a single parent who earns $30,000, with two children, will be $1,200 higher than in 1995," said MacPhail. "For a double income family with earnings of $55,000 and two children, it is $1,049."   Improving health care, education and services for families and children "When other provinces made cuts to education and health care, we protected and improved funding for hospitals and schools," MacPhail said. "And we continue to do so. "This government has increased health spending by almost $2 billion since 1991. B.C. continues to allocate more money per person for health care than any other province." Budget '98 includes a $228 million increase for health care, providing new funding for B.C. hospitals, the new mental health plan, Pharmacare, and reducing waiting lists for heart, cancer and kidney patients. A $100 million funding increase for the K-12 education system adds 400 new teachers to B.C. classrooms and 300 additional librarians, counsellors and classroom aides. As well, the government commits $1.5 billion for school capital construction over the next five years, with the first $339 million in this year's budget. B.C.'s post-secondary education system receives a $40 million increase to add 2,900 new spaces at B.C. colleges and universities and boost student financial assistance. The freeze of college and university fees will be extended for 1998/99 for 150,000 students. A total of $36 million is provided for youth employment and training programs to help 17,000 young people make the transition to the workforce in 1998/99. The BC Family Bonus which supports working families is now a model for Canada. Budget '98 includes a funding increase of $64 million for the Ministry of Children and Families to help children who are most at risk.   Last year's budget targets and debt targets were met In the 1997/98 fiscal year, provincial government spending was down for the first time in 40 years. Total expenditures were $100 million less than the year before. Provincial revenue was on target at $20.2 billion despite a slowdown in forest revenues. "As a result, we ended the year with a deficit of $169 million, below our target of $185 million," said MacPhail. Provincial tax-supported debt is $780 million less than projected. British Columbia's debt-to-GDP ratio is estimated at 20.5% -- well below the target set in the province's financial management plan. "Our taxpayer-supported debt-to-GDP ratio is the second lowest in Canada," MacPhail said, "and our debt per capita and debt servicing charges are still the lowest in the country."   Budget '98 cuts deficit and overhead costs "To fund our tax cuts, I have decided to set the deficit target at $95 million, close to half the level of last year and the less than half of one per cent of the total budget," MacPhail said. "If our economy performs as forecast, it is our plan to have a balanced budget in 1999/2000." Budget '98 is based on a prudent forecast of 0.3 per cent growth in the B.C. economy. Revenue is forecast to increase by $230 million. Expenditures are to rise by $141 million -- growth of 0.7 per cent. To protect health and education priorities, $278 million is being cut from other programs and government administrative overhead.
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FOR MORE INFORMATION CONTACT: Irwin Henderson Executive Director Phone: (250) 356-5975	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