On February 16, 2016, Minister of Finance Michael de Jong announced British Columbia’s 2016 budget. “Balanced Budget 2016” proposes the investment of $1.6 billion over three years in new and additional spending on primary services, such as social support, community safety and economic development initiatives. Furthermore, annual 3 percent increases have been proposed for spending on health care. These increases will be partly funded by lower interest costs as a result of the retirement of operating debt to the tune of $500 million. The budget includes a forecasted surplus of $377 million for 2015-16, with similar surpluses for the following three years.
Today’s budget contained only modest commodity tax changes, as summarized below.
Provincial Sales Tax Measures
Expansion of exemption for farm-use goods
Qualifying farmers will be interested to learn that the budget proposes an exemption from provincial sales tax for telescopic handlers and skid steers (including specifically-designed attachments for these items), as well as polycarbonate greenhouse panels (when purchased in a minimum quantity of 500 square metres), provided that such items are used solely for a farming purpose. The expanded exemption will take effect on February 17, 2016.
Further information on how the PST applies to farmers can be found in the updated British Columbia Bulletin PST 101, "Farmers".
Carbon and Motor Fuel Tax Measures
Beginning on March 1, 2016, the budget proposes to do away with refund applications for the carbon and motor fuel tax security due in certain situations. This will be accomplished by introducing an exemption from the requirement to pay security up-front, where:
- A collector sells fuel in British Columbia to a person who is exempt from the requirement to pay security in respect of that fuel; or
- A deputy collector purchases fuel that will be sold outside of British Columbia, and that fuel is to be removed from the province by: the person, or someone acting on behalf of the person, who sold the fuel to the deputy collector; or a common carrier, where the contract with the common carrier for the export of the fuel to a place outside of British Columbia is entered into at the time of purchase by the deputy collector.
Additional information on the exemptions from the requirement to pay security on carbon and motor fuel taxes can be found in British Columbia Bulletin MFT-CT 001, "Fuel Sellers".
As required under the Carbon Tax Act, the government also reported that it achieved revenue-neutrality in respect of the carbon tax for 2014-15. Revised estimates indicate that provincial revenue reductions from personal and business tax measures exceeded the carbon tax collected by $326 million in 2014-15. In addition, the revised forecast for 2015-16 projects that personal and business tax reductions will exceed projected carbon tax revenue by $514 million. No changes were announced to carbon tax rates, which are currently at $30 per tonne of carbon dioxide equivalent emissions.
New Commission on Tax Competitiveness
The budget also announced the establishment of a “Commission on Tax Competitiveness” to examine the effectiveness of the province’s current taxation systems and whether current policy sufficiently attracts business investment and growth. The province notes that advances in technology, an aging population base, and the fact that the current provincial retail sales tax was originally introduced in 1948 were all considerations in determining the need to establish the Commission. Unsurprisingly, the scope of work to be undertaken by this Commission specifically excludes any return to the HST.
Further information on British Columbia's 2016 budget may be found on the province's web site at: