On February 15, 2011, Finance Minister Colin Hansen presented British Columbia’s 2011 budget, which was created with a focal point of “providing a strong, stable foundation for B.C.’s future”. Minister Hanson referred to this year’s budget as a “status-quo budget”, and this is supported by the budget assumption that the HST will continue to operate in British Columbia as it does today. However, the government offered the caveat that, where the HST is eliminated by the upcoming referendum, the budget for the current year would require a significant overhaul – mostly attributable to the requirement to repay the $1.6 billion in transitional funding received by the province from the federal government in exchange for harmonizing its sales tax with the GST.
In addition to focusing on a commitment to fund vital public services and demonstrating prudent fiscal management while the province recovers from the global economic slowdown, this year’s budget included the following significant tax changes.
Commodity Tax Measures
Carbon Tax
Effective February 16, 2011, eligible purchasers will receive a credit on their natural gas bills for blends of biomethane and natural gas sold to them under qualifying contracts by registered retail dealers of natural gas who inject biomethane into the system. In order to qualify for the credit, the contracts must clearly indicate the amount that purchasers are paying for a specified volume or percentage of biomethane. The credit that is available is equal to the carbon tax payable on the specified volume or percentage of biomethane.
Biomethane is a carbon neutral renewable fuel produced from biomass (e.g., agricultural and other organic wastes). A carbon tax exemption is available on the purchase of 100% biomethane, and on the biomethane portion of a blend where the actual amount of biomethane in the blend is known.
As required under the Carbon Tax Act, the government also reported that it achieved revenue-neutrality in respect of the carbon tax for 2010/2011. In fact, the revised government forecast indicates that reductions in other personal and business tax revenue measures will exceed carbon tax revenue by $122 million.
Income Tax Measures
There were no significant income tax changes introduced in this year’s budget. As previously announced, the British Columbia corporate income tax rate was decreased from 10.5% to 10.0% on January 1, 2011.
In addition, as previously announced, the International Business Activity (IBA) Program has been amended to include Schedule III banks, effective April 1, 2011. Schedule III banks are branches of foreign banks operating in Canada. The IBA Program provides for refunds of British Columbia corporate income tax paid by qualifying international businesses operating in the province.
Further information on British Columbia’s 2011 budget may be found on the province’s web site at:
Budget 2011 - Province of British Columbia.