Report E: TAX EXPENDITURES

TABLE E1
SOCIAL AND INCOME TRANSFER PROGRAMS

TAX EXPENDITURE

1998/99
Estimated Cost


PROVINCIAL SALES TAX ($ millions)
Exemptions for the following items:
Food (basic groceries, snack foods, candies, soft drinks and restaurant meals) 703
Residential fuels (electricity, natural gas, fuel oil, etc.) 102
Prescription and non-prescription drugs, vitamins and certain other health care products and appliances 60
Children's clothing and footwear 21
Clothing patterns, fabrics and notions 6
Specified school supplies 9
Books, magazines and newspapers 52
Basic telephone and cable service 51
"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 Bonus1 112
Sales tax credit 41
Political contributions tax credit 2
Federal Measures2
Deduction and inclusion of alimony and child support payments 17
Charitable donations tax credit 84
Tax credits for tuition and education3 66
Tax credits for disabilities and medical expenses 49
Pension income tax credit 25
Credit for persons older than 65 years 100
Exemption from capital gains up to $500,000 for small businesses and family farms 71
Deduction for residents of northern and isolated areas 15
Non-taxation of employer-paid insurance premiums for group private health and welfare plans 114
Registered Retirement Savings Plans4:
exemption for — contributions 595
  — investment earnings 385
taxation of — withdrawals (193)
Total   787
Registered Pension Plans4:
exemption for — contributions 381
  — investment earnings 679
taxation of — withdrawals (401)
Total   659
CORPORATION INCOME TAX5
Charitable donations deduction 8
SCHOOL AND RURAL AREA PROPERTY TAXATION6
Home owner grant 478
Exemption for places of worship 8
Municipal discretionary exemptions 15
PROPERTY TRANSFER TAX
Exemption for first-time home buyers 29
Exemptions for the following items:
Property transfers between related individuals 28
Property transfers to municipalities, regional districts, hospital districts,
library boards, school boards, water districts and educational institutions
3
Property transfers to charities registered under the Income Tax Act (Canada) 2
 
1 The above estimate of $112 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, $240 million for 1998/99, is presented in the BC Benefits Vote because it represents payments to families which exceed their provincial income tax liabilities. Thus the total cost of the program is $352 million.
2 The estimates show provincial revenue losses only. They are based on estimates of projected federal losses contained in Government of Canada: Tax Expenditures, 1998. 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.
3 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.
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 applying British Columbia's share of corporate taxable income and the relevant tax rates to the federal estimate. (Prior to 1997, federal tax expenditure reports did not include projections; previous estimates of provincial revenue losses were based on historical federal estimates.)
6 The property tax estimates, except for the home owner grant amount, are for the 1998 calendar year, and include only school and rural area property taxes levied by the province.

 

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