July 30, 2001
RELIEF, SOUND FISCAL MANAGEMENT TO BOOST ECONOMY
— British Columbia's public services depend on a healthy economy,
which demands a competitive tax system and better fiscal management,
Minister of Finance Gary Collins said today. To that end, the minister
announced a business tax cut package to complement the 25 per cent
personal income tax cut unveiled in June and laid out a fiscal
management strategy with his fiscal update for 2001-02.
a province with a vital, vibrant economy can afford high-quality public
health and education," said Collins. "That's why it's so
essential to get our economy back on track."
noted that, since the March 15 budget, the provincial revenue projection
has fallen by $1.85 billion, partly due to focused tax reductions as
well as lower energy and electricity prices and a slowing U.S. economy.
At the same time, projected expenditures have risen $455 million, mainly
because the government disclosed a number of expenditures, including
Pharmacare, that weren't fully recognized in the budget. As a result,
the summary accounts deficit stands at $1.5 billion.
we don't do something now, over time B.C. will wither away and end up
being a have-not province, without the strength to provide quality
public services," said Collins. "Today, we're moving forward
with another key to prosperity — tax reductions designed to increase
investment, revitalize industries like logging, mining and
transportation and strengthen emerging sectors like high tech."
of today's tax cuts, which will inject $248 million back into the
economy this year, include:
July 31, production machinery and equipment bought by eligible
manufacturers — and by logging, mining and energy-sector
businesses — will be exempt from provincial sales tax. This will
replace the existing investment tax credit for an overall saving to
business of $87 million this year.
corporate capital tax rate on non-financial institutions will be cut
in half on Sept. 1, saving businesses $100 million this year. This
tax will be eliminated one year later.
corporation income tax rate falls to 13.5 per cent from 16.5 per cent on Jan. 1, 2002, and the government will strive to keep the
rate competitive in the future.
help the province's airports, on Aug. 1, the domestic jet fuel tax
rate will fall to two cents a litre from five and the aviation fuel
rate, two cents a litre from three.
Aug. 1, the seven per cent tax on bunker fuel will be eliminated,
which will make British Columbia ports more attractive to cruise
ships and other large vessels.
encourage exploration for new mines, on July 31, British Columbia
will introduce a 20 per cent flow-through share credit modelled on a
similar federal credit. The existing mineral exploration tax credit
will remain for those who don't use flow-through shares.
of tomorrow, the threshold at which the passenger vehicle surtax is
introduced will be $47,000 — up from $32,000.
believe these reductions, combined with our personal tax cuts and other
policy and regulatory changes, will boost B.C.'s economy this year and
set the stage for even more significant growth next year," said
Collins. "These business tax cuts are a sound investment in our
future that will pay dividends. And anyone who doubts that only has to
look at the impact of our personal tax cut."
June 6, the government announced a 25 per cent cut in provincial
personal income tax. Since then, the Conference Board of Canada has
reported a 20 per cent increase in its B.C. consumer confidence index,
compared to a three per cent national rise.
reiterating the government's commitment to preserving the health and
education budgets presented in March, the minister outlined building
blocks on which the government will construct a comprehensive, three
year fiscal plan to be introduced with next year's budget. These
measures include the government's core services review, which will
examine every program and service to ensure public resources are focused
on the most important needs, and the introduction of key pieces of
legislation introduced today includes the Balanced Budget and
Ministerial Accountability Act, which ties ministerial salaries to
budget targets and requires a balanced budget by 2004-05. As well, the
amended Budget Transparency and Accountability Act will see the province
move to implement generally accepted accounting principles and will ban
the use of special warrants in all cases but natural disasters and
all its advantages, British Columbia should be leading the country in
economic growth," said Collins. "With sound fiscal management,
clear priorities and bold, innovative changes, we can truly deliver on
the promise of a new era of hope and prosperity for all of us, in the
best province, in the best country, anywhere in the world."
finance minister also tabled the public accounts, debt statistics and
preliminary financial and economic review reports. The public accounts
are audited financial results for the last fiscal year. The debt
statistics report provides detailed information for the 2000-01 fiscal
year on the makeup of the provincial debt and how government manages it.
The preliminary financial and economic review provides a description of
the province's economic performance in 2000 and explains the financial
performance of the government and Crown corporations for the 2000-01
1 866 356-7241
on consumption tax changes:
Consumer Taxation Branch
604 660-4524 or 1 877 388-4440