Provincial budget is boring
Last week, BC Finance Minister Michael de Jong tabled the 2017 provincial budget.
There has already been plenty of commentary written on this budget, but most is skewed heavily in one direction or the other based on the writer’s political beliefs. So politics aside, what does this budget actually mean for you?
Firstly, with an election coming up on May 9th, you need to remember that most of the proposed changes will only matter if the Liberal party is re-elected.
Assuming they are, here’s what they’re proposing (note that I say proposing, because they must still be passed into law):
A win in general for all B.C. residents is the fact that our province appears to be in pretty good fiscal shape compared to a lot of Canada. This represents the fifth consecutive balanced budget in B.C. with surpluses in each of the next three years. A strong and healthy economy will lead to further tax cuts and more money available for social programs.
The big pre-budget question was if we would see any reductions in personal income tax rates due to the promise to “pay back taxpayers for the financial sacrifices of recent years.”
There were no personal tax rate changes announced in this budget, but tax brackets and personal credit amounts have been indexed by 1.8 per cent. We did see a slight increase to the tax rate of “non-eligible” dividends and a decrease to the small business corporate income tax rate. Instead, the government chose to fulfill this “paying back” promise by reducing MSP premiums for many residents.
Effective in 2018, those families with net household incomes up to $120,000 will see their MSP premiums reduced by 50 per cent. Those with net incomes over 50 per cent won’t get a reduction, but also won’t face the previously planned 4 per cent increase either. In addition, the income threshold at which households are fully exempt from MSP premiums will increase by $2,000. This seems to be a fair solution for many, and I would argue that those earning over $120,000 should be OK to continue paying the full MSP “tax.”
Unfortunately, though, the ones who will lose out on receiving any type of financial break are the 1 million B.C. residents whose employers already pay for their premiums as part of their benefit package, as it will result in a direct savings for the employer, but no savings for the individuals.
The student-loan program got a big boost as they have proposed to reduce the interest rate on B.C. student loans from prime plus 2.5 per cent down to prime, effective August 1. This will cut the interest payments on student loans almost in half.
A $50 per month increase in the disability assistance rates will certainly help those who qualify, although most would agree that the increase is still short of what’s really needed. A single “person with disability” designated individual will now receive $1,033 per month, which is tough to live on.
The bulk of the budget’s spending increases were allocated to health care, child welfare and the education system. While not necessarily sufficient to solve all of the problems in these key areas, this increased funding is certainly a step in the right direction.
The budget did not set aside any money for a final deal with the B.C. Teacher’s Federation, but it did leave some wiggle room via a $400 million contingency fund.
The 2017 provincial budget also held a host of “boutique,” or one-off, tax credits that may help people in certain situations. The real value of the plans they’ve laid out though are a mild reduction of taxation via the MSP reductions and an arguably more important increase in funding to many of the key social programs and services that we rely on.
There was really nothing earth shattering in this budget and I would say that is a good thing.
Critics will no doubt find pieces they don’t like and you can always argue that money could have been better allocated to some degree, but I would suggest British Columbians on all sides should be OK this go around.