B.C. Budget 2024: Energy credit, employer health tax cut amid slew of affordability steps

With a provincial election less than a year away, B.C.’s NDP government has delivered a budget heavy on rebates and cost-saving measures.

Several credits will be rolled out in 2024 for the public, while the business community is getting a tax break that advocates have been seeking for years.

This will be the first year that renters can access the $400 renter’s rebate, which the government announced in its budget last year.

The first credit, a break on BC Hydro and Fortis BC bills, will roll out in April, costing taxpayers about $370 million.

The BC Electricity Affordability Credit will apply to residential and commercial power users.

The finance ministry estimates it will shave about $100 off a residential electricity bill over a year, depending on power usage.

Meanwhile, commercial and industrial ratepayers will see bill credits proportional to about 4.6 per cent of their power usage.

The move comes amid concerns about BC Hydro needing to import power under drought conditions and will see the Crown corporation’s projected revenue fall to $314 million this year.

Finance Minister Katrine Conroy defended the spending.

“We feel (BC Hydro) can afford it, and people can’t afford us not to do it,” she said.

The province finally moved on a key ask from B.C.’s business community, making a major change to its employer health tax.

The NDP first implemented the payroll tax in 2019 to replace revenue lost by eliminating MSP payments.

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Business advocates say that measure has been yet another cost pressure on entrepreneurs already struggling under inflation, rising rent, and overhead and labour shortages.

The budget will lift the threshold for the tax from $500,000 to payrolls of $1 million but increase the tax rate for businesses with a payroll of between $1 million and $1.5 million from 2.925 per cent to 5.85 per cent. The rate above $1.5 million remains unchanged.

The change, which will cost about $108 million in 2024, will be backdated to the start of the year, with the province projecting the exemption will now apply to 90 per cent of businesses.

Starting in July, the budget will boost the B.C. family benefit by 25 per cent per child on regular monthly payments through June 2025.

The province estimates the average family will see $445 more throughout the bonus period, with a family of four getting about $1,760 and an average single-parent family getting about $2,790.

The NDP is also raising the eligibility threshold so that it includes another estimated 66,000 families who’ve never received it.

The increased benefits are forecast to cost the province just shy of a quarter-billion dollars.

Also in July, the maximum payout for the annual climate action tax credit payment will climb from $447 to $504, from $223 to $252 for a spouse or partner, and from $111.50 to $126 per child.

Labour leaders expressed support for the spending measures, which they said put the province on the right track to helping workers make ends meet.

“Now is not the time for cuts in budgets, now is not the time to dig into trying to find ways to save money,” BC Federation of Labour president Sussanne Skidmore said.

“Now is the time to make sure we are supporting people where they need it the most.”

The Canadian Taxpayers Federation, by contrast, called the flow of government cash “unacceptable.”

“Deficits mean debt mean interest payments,” B.C. director Carson Binda said, adding that the province’s record-breaking deficit exceeds even those logged during the COVID-19 pandemic.

Representatives of B.C.’s business community expressed cautious optimism — particularly around the energy credits and changes to the Employer Health Tax.

“But it is still a very high-cost environment and it remains an incredible challenge for businesses, especially small and medium-sized businesses,” said Bridgitte Anderson, president and CEO of the Greater Vancouver Board of Trade.

Fiona Famulak, president and CEO of the BC Chamber of Commerce said she was pleased to see movement on the EHT, but that the new threshold fell short of the $1.5 million it had pushed for.

“We’re halfway there, and that will allow a number of small businesses to put that money back into their businesses to grow and innovate,” she said.

But Famulak, too, worried about the long-term consequences of rising debt and deficits.

“Can we afford the plans for the next few years?” she asked.