BC Budget revealed. Three main highlights in relation to real estate:
1. Foreign Buyers Tax has increased from 15% to 20% and is now inclusive of the Fraser Valley, Kelowna, Victoria and Nanaimo.
2. Property Transfer Tax: Homes over $3million go from 3% to 5%.
3. Speculation Tax: 2% in 2019 applies to vacant properties owned by people not paying income tax in BC.
Read here or contact me for more information:
The B.C. government is offering modest relief on the rising cost of child care, housing and medical services plan premiums, funded by a raft of new tax hikes that target businesses, foreign buyers, housing speculators and expensive homes.
THE 2018/19 B.C. BUDGET AT A GLANCE:
• A new child care program that makes care effectively free for some low-income families, and offers modest subsidies for others based on income. There’s no mention of when, or even if, government will meet its $10-a-day child care election promise.
• An immediate increase to the foreign buyer tax from 15 per cent to 20 per cent, and an expansion to Kamloops, Kelowna, Greater Victoria and the Fraser Valley.
• The elimination of Medical Services Plan premiums by 2020 to be replaced by a payroll health tax for businesses.
• $6.2 billion over 10 years to create 33,700 affordable housing units.
• A crackdown on fraud and tax evasion in the housing market, as well as a new speculation tax on those who don’t pay income tax in B.C.
• A hike on the property transfer tax on Feb. 21 from three per cent to five per cent on properties worth more than $3 million, as well as an increase on school taxes.
• A steep hike on tobacco taxes, as well as on taxes for luxury vehicles worth more than $150,000.
• $5.2-billion in new spending over three years, and $5.5-billion in new taxes.
• An estimated $219-million surplus in fiscal 2018/19.
VICTORIA – The B.C. government is offering modest relief on the rising cost of child care, housing and medical services plan premiums, funded by a raft of new tax hikes that target businesses, foreign buyers, housing speculators and expensive homes.
Finance Minister Carole James unveiled a budget Tuesday with an estimated $219-million surplus, the first full fiscal plan for the NDP government since it assumed power last July.
James earmarked $1 billion over three years to create child care benefits of up to $1,250 a month for an infant in a low-income family starting in September, effectively making child care free for a family that earns less than $45,000 a year. The subsidies dwindle to as low as $240 for a middle-income family, depending on the age of the child (see a full table at the bottom of this story).
The subsidy, as well as a separate program of per-space government fee reductions, are first steps toward a “made-in-B.C. universal child care program,” said James.
“With these commitments we are starting ourselves on a path to universal child care,” she said, adding it will help as many as 50,000 families by 2021 and relieve fees for approximately 27,000 low-income families by the same year.
“This represents real transformation care in our society.”
The government will also create 22,000 new spaces, said James, and give incentives for unlicensed day cares to convert to licensed.
But it’s a far cry from the $10-a-day NDP election platform, and government officials were unable to say when, or even if, the government could honour that promise.
“Although this is our first budget and we will have been government for seven months, the expectations are huge,” said James.
“The expectations we will do everything in our first budgets are huge. So it’s even more important from my perspective to make sure we’re focused on our priorities.”
Nonetheless, child care advocates praised the move. Sharon Gregson, from the child care coalition that created the $10-a-day campaign, said the government was making the right early moves and once parents get into the program it will naturally begin to expand toward its original goal.
“They look on pace to achieve something very similar to what we recommended by year eight,” added Paul Kershaw, the University of B.C. professor who represents Generation Squeeze.
The government outlined $5.2-billion in new program spending over three years, for child care, housing, free disability bus passes, a freeze on B.C Ferries fares, health care improvements, more teacher hires and boosts to skilled trades training.
To pay for it, the NDP are relying upon more than $5.5 billion in new tax measures, including raising the foreign buyer tax from 15 per cent to 20 per cent on Feb. 21 and expanding it from Metro Vancouver to include the Fraser Valley, Greater Victoria, Nanaimo and the Central Okanagan Regional Districts.
The government is also hiking the property transfer tax on Feb. 21 from three per cent to five per cent on properties worth more than $3 million.
And the province will levy a new “speculation tax” on those who buy B.C. properties but don’t pay income taxes in the province, with exemptions set for primary residences and rental properties. As well, it’s increasing the school tax on properties worth more than $3-million.
“We’re asking those who benefited from high prices to give a bit more back,” said James.
The tax increases also incorporate a steep jump on tobacco, which will generate almost $100 million for the province, and increased fees on luxury vehicles that sell for more than $150,000. New legalized marijuana is set to add $50 million per year.
The carbon tax is increasing $5 per tonne per year, adding $212 million a year. The NDP will also see the first full year of revenue from its decision to increase the corporate tax rate and high-income tax rate last year.
James said the government will eliminate MSP premiums in January 2020, to be replaced by a new payroll health tax on businesses that hits corporations with a payroll of $1.5 million and greater with a full 1.95 per cent, but levies no charges on smaller businesses with payroll of fewer than $500,000.
The new payroll health tax comes into effect in 2019, meaning the government earns $463 million this coming fiscal year by double-charging some companies for both a payroll tax and existing MSP payments they may pay on behalf of employees.
Eliminating MSP fees entirely was also a key promise of the NDP during the May 2017 provincial election.
“I’d expect people will understand this is a more fair system, a less regressive tax system,” said James.
Business groups slammed the tax.
Val Litwin, of the B.C. Chamber of Commerce, called the tax pressures added to businesses a “dog pile.”
“The ratio is too much,” he said.
The MSP move to a payroll tax came as a “nasty surprise,” said Jock Finlayson, executive vice-president of the B.C. Business Council.
“We’re not very happy with a new employer health tax because we weren’t expecting it,” he said.
But Finlayson also said he sympathizes with the pressure on the government to do something about housing affordability and generally supports the initiatives.
The budget includes what James said is the largest investment in B.C.’s history for affordable housing. That includes $1.6-billion over three years to build and maintain affordable rental housing, as well as boosts for post-secondary campus housing and housing for women and children fleeing domestic violence.
Renters will see a $930 per year increase to the rental income assistance program, as well as a funding boost to the seniors’ shelter grant and new legislation to toughen rental laws while allowing strata corporations to levy more fines and penalties against those who break the rules.
There was no mention in the budget of the promised $400 annual renter rebate promised during the election, though James said would consider it in the future along with other reforms for renters such as changes to the annual homeowner grant program to support renters.
The housing measures come with a suite of reforms to crack down on tax evasion and fraud, including forcing numbered companies and corporations to declare the beneficial ownership behind their transactions, and the creation of a new database on the pre-sale condo assignments to make sure taxes are paid on pre-sale flips.
“Our goal is fairness,” said James. “Fairness for the people who live here, work here and who pay their taxes here.”
In total, there are $1.3 billion in new housing-related taxes.
“They are taxes related to correcting the housing crisis in this province,” said James. “The public has been asking for those taxes to be brought in, the public has been asking for the market to be corrected.”
The NDP dismantled the Liberal-created B.C. Home Owner interest-free mortgage program for first-time buyers, using that money to create a new “Housing Hub” agency that will work with non-profit groups, churches and the private sector to find land for housing projects.
Partnerships for housing are key, because budgetary numbers show the NDP will fall well short of the 114,000 new units they promised during the election to build over 10 years.
The budget sets aside almost $6.2 billion over 10 years to create 33,700 housing units, with the private sector being required to generate the remaining 80,300 units if the party hopes to hit its election goal.
James said she hopes the overall impact of the taxes and new supply will be a “moderation” in the market that will drop prices.
“Our hope certainly is the tax measures we’ve put together, in particular in the housing strategy, will look at lowering the price of housing,” she said.
The budget begins to set aside money for the Pattullo Bridge replacement. And it allocates $1.8 billion over three years for new transit infrastructure, but no breakdown on individual projects like the Broadway subway line or Surrey light rail because individual negotiations on projects are incomplete.
Overall, the province’s economy is estimated to perform among the strongest in the country.
“We are economic leaders in Canada, but I do not believe we can consider ourselves leaders if we are not sharing the prosperity of our province with the British Columbians who helped create it,” she said.
Much of the government investments are funded using a $15-billion taxpayer-supported capital plan over three years.
The province’s total debt is set to jump by $4.1-billion, the largest single-year jump since 2012/13.
British Columbia debt is expected to rise to $69.4 billion in 2018/19, though James said its indictors by revenue and GDP remain affordable. Almost four cents of every dollar of government revenue goes toward debt repayment.
BC.’S NEW CHILD CARE BENEFITS
For families of up to $44,999 income
Licensed group infant: $1,250 maximum monthly benefit
Licensed group toddler: $1,060
Licensed family infant/toddler: $1,000
Licensed group care three years to school age: $800
Licensed family group three years to school age: $800
Licensed group school age: $420
Licensed family school age: $420
Licensed preschool: $330
Licensed care surrounding school day: $420
For families of up to $79,999 income
Licensed group infant: $910 maximum monthly benefit
Licensed group toddler: $772
Licensed family infant/toddler: $728
Licensed group care three years to school age: $582
Licensed family group three years to school age: $582
Licensed group school age: $306
Licensed family school age: $306
Licensed preschool: $240
Licensed care surrounding school day: $306
NEW CHILD CARE FEE REDUCTION PROGRAM
Effective April 2018, licensed facilities can opt into a program to reduce child care fees by the following amount:
Licensed group infant/toddler: $350 per month per space
Licensed family infant/toddler: $200 per month per space
Licensed group care for ages 3-5: $100 per month per space
Licensed family care for ages 3-5: $60 per month per space