Budget '98 -- Table E2: Economic Development and Business Assistance Programs

Report E: TAX EXPENDITURES

TABLE E2
ECONOMIC DEVELOPMENT AND BUSINESS ASSISTANCE PROGRAMS

TAX EXPENDITURE
1997/98
Estimated
Cost

PROVINCIAL SALES TAX
($ millions)

Commissions paid to retailers and hotel operators 24

Exemptions for the following items:

• Livestock for human consumption and agricultural feed, seed and fertilizer 35

• Exempt purchases by farmers, fishers and aquaculturists 20

• Magnetite for processing coal, eligible exploration equipment and drill bits for mineral exploration and production 2

FUEL TAX

Tax exemption for international flights carrying cargo 10

Lower rate for family farm trucks (on road) 3

PERSONAL INCOME TAX

Venture capital tax credit 6

Employee venture capital tax credit 6

CORPORATION INCOME TAX

Provincial Measures

International financial business tax refund ¹ 4

Two-year corporate income tax holiday for small business 1

Federal Measures ²

Earned depletion 3

Allowable business investment loss 4

CORPORATION CAPITAL TAX

Exemption for family farm and cooperative corporations 3

Two-year tax holiday for eligible British Columbia investment expenditures 21

SCHOOL AND RURAL AREA PROPERTY TAXATION ³

School tax assessment reduction on current values for farm buildings and farm land, and residences in the agricultural land reserve 16

Assessment of farm land at farm use values ⁴ 84

Assessment exemption of $10,000 for industrial and business properties 6

Overnight tourist accommodation assessment relief 3

Managed forest land classification 8

OTHER TAXES

Oil and gas royalty holiday 6

¹ Includes employee income tax refunds.

² The provincial revenue loss estimates for federal measures are based on estimates of the federal losses contained in Government of Canada: Tax Expenditures, 1997. The federal estimates are based on 1997 estimated incomes. British Columbia corporate income tax expenditures are estimated by applying British Columbia’s share of corporate taxable income to the federal estimates, and then applying the relevant tax rates. Certain tax expenditure items have been excluded where no data were available. (Prior year’s federal tax expenditure reports did not include projections; previous estimates of provincial revenue losses were based on historical federal estimates.)

³ Estimates are for the 1997 calendar year and include only school and rural area property taxes levied by the province.

⁴ Currently, the values of farm land and residential land in the Agricultural Land Reserve are reduced by 50 per cent for school tax purposes. The $84 million estimate assumes the 50 per cent reduction to value would not be applied to farm land assessed at market value. If, on the other hand, this reduction were applied, the tax expenditure of not assessing farm land at market value would be only $43 million.

Return to Report E: Tax Expenditures

TAX EXPENDITURE			1997/98 Estimated Cost
PROVINCIAL SALES TAX			($ millions)
Commissions paid to retailers and hotel operators			24
Exemptions for the following items:
	•	Livestock for human consumption and agricultural feed, seed and fertilizer	35
	•	Exempt purchases by farmers, fishers and aquaculturists	20
	•	Magnetite for processing coal, eligible exploration equipment and drill bits for mineral exploration and production	2
FUEL TAX
	Tax exemption for international flights carrying cargo		10
	Lower rate for family farm trucks (on road)		3
PERSONAL INCOME TAX
	Venture capital tax credit		6
	Employee venture capital tax credit		6
CORPORATION INCOME TAX
Provincial Measures
	International financial business tax refund ¹		4
	Two-year corporate income tax holiday for small business		1
Federal Measures ²
	Earned depletion		3
	Allowable business investment loss		4
CORPORATION CAPITAL TAX
	Exemption for family farm and cooperative corporations		3
	Two-year tax holiday for eligible British Columbia investment expenditures		21
SCHOOL AND RURAL AREA PROPERTY TAXATION ³
	School tax assessment reduction on current values for farm buildings and farm land, and residences in the agricultural land reserve		16
	Assessment of farm land at farm use values ⁴		84
	Assessment exemption of $10,000 for industrial and business properties		6
	Overnight tourist accommodation assessment relief		3
	Managed forest land classification		8
OTHER TAXES
	Oil and gas royalty holiday		6

¹	Includes employee income tax refunds.
²	The provincial revenue loss estimates for federal measures are based on estimates of the federal losses contained in Government of Canada: Tax Expenditures, 1997. The federal estimates are based on 1997 estimated incomes. British Columbia corporate income tax expenditures are estimated by applying British Columbia’s share of corporate taxable income to the federal estimates, and then applying the relevant tax rates. Certain tax expenditure items have been excluded where no data were available. (Prior year’s federal tax expenditure reports did not include projections; previous estimates of provincial revenue losses were based on historical federal estimates.)
³	Estimates are for the 1997 calendar year and include only school and rural area property taxes levied by the province.
⁴	Currently, the values of farm land and residential land in the Agricultural Land Reserve are reduced by 50 per cent for school tax purposes. The $84 million estimate assumes the 50 per cent reduction to value would not be applied to farm land assessed at market value. If, on the other hand, this reduction were applied, the tax expenditure of not assessing farm land at market value would be only $43 million.