NDP government introduces new speculation tax, eliminates MSP premiums in its 1st budget

NDP government introduces new speculation tax, eliminates MSP premiums in its 1st budget
From CBC - February 20, 2018

The B.C. government delivered on a wide variety of promises from itselection platform and throne speech in itsfirst budget, forecasting a $219 million surplus for the upcoming fiscal year on the strength of a strong economy.

"A budget should not stand alone, because a budget is more than revenue and expenses. It's about people," said Carole James, outlining the first NDP budget in British Columbia since 2001.

"The choices that we have made in this budget focus on a path to prosperity for everyone."

Those choices include billions more in spending overthree years, focusedprimarily on education, child care, health and social programs, along with freezing ferry fares on major routes and reducing them by 15 per cent on smaller routes.

But it also increases revenues through new taxes directed at the housing market, a new employer health taxand includes hikesto the carbon and tobacco taxes.

That, combined with strong GDP growth (predicted to be 2.3 per cent for 2018), allows the government to forecast a surplus, even with deficits still projected for ICBC in the years ahead.

"The expectations that we will do everything in our first budget arehuge. So it's even more importantto focus in on our priorities," said James.

"There is no time to lose."

MSP premiums eliminated

Perhaps the biggest surprise in the budget was the announcement that Medical ServiceS Plan (MSP) premiums would be completely eliminated on Jan.1, 2020over a year ahead of the government's self-imposed deadline.

"It will take some pressure off people's pocketbooks. And it will help make our tax system more fair and progressive," said James.

To replace the revenue lost from the premiums, which were generally paid separately by individuals, the government will create a new employer health tax.

It will charge companies a percentage of their payroll under a progressive taxation system.Companies with a payrollunder $500,000 will paynothing, and companies with a payrollover $1.5 million will pay1.95 per cent of their payroll.

"We believe we continue to provide supports to businesses in everything from lowering the small business tax rate to keeping the corporate tax rate competitivewe are putting the pieces in place that will support businesses," said James, who emphasized the vast majority of businesses would not be paying the full rate of the tax.

30-point housing plan

The government had long promised itwould take action on housing affordability in this year's budget, and today announced a wide variety of taxes to curb speculation and decrease demand in the market, including:

The government says the full suite of housing measures will be in place by the beginning of next year.

With the revenue it's forecasting, the government is planning to spend $1.6 billion in new housing unitsall part of a 30-point detailed housing plan itunveiled as part of the budget.

"What we are looking to do is moderate the market," said James.

"We are taking some bold measures, there's no question."

Surpluses contingent on ICBC reforms

The government projected a $151 million surplus for the current fiscal yearand surpluses of $219 million, $281 million and $284 million over the next three years.

Split reaction


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