15 Sep BC Budget 2017 Update
Posted at 19:10h in BC Tech Blog, The Voice by BCtechcontent
Earlier this week, the new BC government delivered its Budget 2017 Update – essentially a mini-budget that outlines their priorities ahead of their first full budget in February next year. In the backdrop of a sizeable surplus in 2016-17, the Budget Update signaled the BC NDP’s commitments to improving affordability and increasing spending in social assistance, health, and affordable housing. Overall, the Budget Update contained commitments identified in either the BC NDP platform, or the Confidence and Supply Agreement that was entered between the BC NDP and BC Green party. The updated economic forecast for the province shows 2.9% GDP growth for this fiscal, reaffirming British Columbia’s status as the strongest economy in Canada. The higher operational spending includes:
Reduction in Medical Service Premiums – reflecting a 50 percent cut in the Medical Services Plan premiums for all British Columbians, effective January 1, 2018;
Elimination of Tolls – reflecting the revenue loss from the removal of tolls on the Port Mann and Golden Ears bridges as of September 1;
Increase in Social Assistance – reflecting a $100/month increase for those on income and disability assistance;
Increase in Educational Spending – reflecting the increase to K-to-12 education, as previously committed from the Supreme Court of Canada decision; and,
Increase in Health Spending – reflecting the rate of spending growth in the Ministry of Health, from 3.4% to 4% per year
In addition, the Budget Update provided for changes to taxation rates that lessen the burden for small business but increase the burden for corporate and high-income earners as well as an increase in carbon taxes. Specifically, the Budget Update provides for:
A reduction in the small business corporate tax rate to 2% from 2.5%, effective April 1, 2017;
An increase in the general corporate income tax rate to 12% from 11% beginning January 1, 2018;
A 2.1% increase in personal tax rates for those earning $150,000 or more (from 14.7% to 16.8%) beginning in the 2018 tax year;
An increase in the BC Carbon Tax by $5 per tonne, starting April 2018 and the requirement for the carbon tax to be revenue neutral has been removed.
For the BC Tech community, the Budget Update re-affirmed several commitments that were presented in Budget 2017 by the previous BC Liberal government including:
Post-secondary investments. The budget reiterated the province’s commitments to investing in infrastructure at BC’s post-secondary institutions, including:
Emily Carr University of Art and Design campus redevelopment
UBC undergraduate life science teaching laboratories redevelopment
Simon Fraser University’s new Sustainable Energy and Environmental Engineering Building at SFU Surrey
Industrial Training and Technology Centre at Thomson Rivers University in Kamloops
Extension of Provincial SR&ED program. The provincial SR&ED program was due to expire in September 2017 and this budget extends the program by an additional five years to August 31, 2022.
Increase to Angel Tax Credit Program. BC Budget 2017 also provides for an increase in the small business venture capital program from the current level of $35 million per year to $38.5 million per year, an increase of $3.5MM per year starting in 2017.
Expansion in Eligibility for Interactive Digital Media Tax Credit (IDMTC). Following the extension to the IDMTC in 2015, there were three adjustments made to expand eligibility for the program:
Principal Business Requirement. The requirements were changed to allow any corporation with BC labour expenditures exceeding $2 million to be eligible for the program.
Removal of the restriction the Angel Tax Credit Program. Companies that participate in the Small Business Venture Capital Program are now eligible for the IDMTC.
The Budget Update, however, was silent on the eligibility of Augmented and Virtual Reality applications and projects as they pertain to the IDMTC – something that we believe will need to be revisited in the lead up to Budget 2018. In addition, the Budget Update provided for:
The appointment of an Innovation Commissioner whose mandate is to be an advocate and ambassador on behalf of the BC technology sector in Ottawa and abroad.
The establishment of an Emerging Economy Task Force to address the changing nature of business over the next 10 to 25 years.
The elimination of the International Business Activity Program – administered by AdvantageBC.
As this was an interim budget, there were not a lot of surprises. In the longer term, the prospect of higher income taxes for medium and large companies as well as high-income earners could have a negative effect on the growth prospects for the tech sector in BC. This will need to be balanced with initiatives that can accelerate growth in the areas of capital, talent and market access and we will be working closely with the new government to further the priorities outlined in our 4-Point Plan. A full copy of the BC Budget 2017 Update is available online. To provide your feedback or participate in the BC Tech Association’s policy and advocacy efforts, please email us at policy@wearebctech.com.