CUTS AND FISCAL CONTROLS DETAILED
economic and fiscal update underscored British Columbia's serious fiscal
challenges and outlined measures to restore the province's economic
vitality through tax relief and better fiscal management by government.
tomorrow, production machinery and equipment purchased by eligible
manufacturers as well as logging, mining and energy-sector businesses
will be exempt from provincial sales tax. For many years, British
Columbia was the only province to apply its sales tax to these assets
without providing a significant offset. The exemption replaces a three
per cent investment tax credit introduced last year.
general corporation capital tax will be phased out over two years. The
rate will be cut in half to 0.15 per cent on Sept. 1 and eliminated one
year later. This tax, introduced in 1992, has been a serious impediment
to investment from overseas, and small businesses have paid this tax
indirectly through their rent.
general corporation income tax rate will fall to 13.5 per cent from 16.5 per cent on Jan. 1. B.C.'s rate is currently among the highest in
Canada. The government will strive to keep the rate competitive in the
support the use of British Columbia as a transportation gateway, the
domestic jet fuel tax rate will be reduced to two cents per litre from
five cents on Aug. 1. This will align the province's domestic rate with
those of competing jurisdictions and that charged on international
flights. In addition, the tax rate on aviation fuel will fall to two
cents a litre from three cents a litre. These cuts will make Vancouver
International Airport more competitive and assist regional airports by
lowering the cost of flights within British Columbia.
tax on bunker fuel, which is used to run large ships, ends on Aug. 1.
British Columbia has been one of very few jurisdictions that impose such
a tax. Eliminating it will allow British Columbia ports to supply more
fuel to visiting ships and make the province more attractive to
encourage mining exploration, British Columbia will introduce a 20 per cent flow-through share credit modelled after a federal one. The
existing mineral exploration tax credit will remain for companies and
individuals that do use flow-through shares to finance exploration.
addition, business and individuals will benefit from an increase in the
passenger vehicle surtax threshold. Effective July 31, the threshold
will be raised for the first time since 1994. Applying the surtax to
vehicles costing over $47,000 instead of $32,000 will increase the
purchasing power of individuals and businesses who need trucks,
passenger vans and other vehicles.
and above the $9.3 billion in promised health care funding, the
government has added $45 million for Pharmacare and preserved the K-12
education budget of $4.8 billion. To sustain health care and education
over the long term, the province will use the interim measures announced
today to build a comprehensive, three-year fiscal plan for next year's
core services review will examine every government program and service
to ensure resources are effectively applied. Once the review is
complete, the government will publish three-year budgets and service
plans to outline what British Columbians can expect from government,
including detailed strategies, targets and costing for programs and
government will provide health regions, hospitals, school boards and
post-secondary institutions with three-year funding commitments, to
foster certainty in planning and delivery. The Waste Buster Web site
will allow British Columbians to identify unnecessary red tape and
government waste, and will require the relevant ministries to respond
within a set period.
Supporting Stronger Fiscal Management
Balanced Budget and Ministerial Accountability Act mandates a balanced
budget by 2004/05. Under the act, the government will withhold 20 per cent of cabinet ministers' ministerial salaries starting next year. A
minister will be able to earn back 10 per cent if his or her ministry
meets its budget target. The other 10 per cent will be paid out only if
the government as a whole meets its budget target.
Budget Transparency and Accountability Act has been amended to ensure
the government moves to implement generally accepted accounting
principles. In addition, it forbids the use of special warrants, except
when a natural disaster or the timing of an election necessitates them.
Special warrants allow government to authorize spending in excess of the
provincial budget without seeking the approval of the legislature.
addition, the BTAA makes tabling of the budget on the third Tuesday in
February mandatory and requires ministry service plans letting
taxpayers know what they will get for their money to be tabled with
other existing statutes the Income Tax Act, Corporation Capital Tax
Act, Social Service Tax Act and Motor Fuel Tax Act are being amended
via two bills introduced to implement the government's tax-cutting
initiatives, including the personal income tax cut announced June 6.
1 866 356-7241
on consumption tax changes:
Consumer Taxation Branch
604 660-4524 or 1 877 388-4440