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B.C. budget 2020 includes tax increases on top income earners, pop drinkers

Attorney General David Eby and Premier John Horgan look on as Minister of Finance Carole James delivers the budget speech from the legislative assembly at B.C. Legislature in Victoria, B.C., on Tuesday, February 18, 2020.
Attorney General David Eby and Premier John Horgan look on as Minister of Finance Carole James delivers the budget speech from the legislative assembly at B.C. Legislature in Victoria, B.C., on Tuesday, February 18, 2020. THE CANADIAN PRESS/Chad Hipolito

The B.C. government is increasing taxes on the rich and pop drinkers to help fund the continuation of its affordability agenda.

Finance Minister Carole James announced in the 2020 budget the marginal tax rate for those making more than $220,000 a year will be 20.5 per cent. The increased rate will bring in an estimated additional $216 million next year.

Budget 2020: breaking down the new taxes and spending
Budget 2020: breaking down the new taxes and spending

The government will also start charging the provincial sales tax on carbonated drinks that contain sugar, natural sweeteners or artificial sweeteners, making them seven per cent more expensive. The change comes into effect July 1, 2020.

READ MORE: 2020 budget projects ICBC finally out of deficit

“This is a health initiative to see how we grow healthy young people,” James said.

“I think it’s interesting that if you look at the largest consumption of pop it’s 14- to 18-year-olds. We want to do our part to set the stage for a healthy life ahead.”

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The province is projecting a budget surplus of $227 million in 2020-21, $179 million in 2021-22 and $374 million in 2022-23.

Kris Sims of The Canadian Taxpayers Federation says by removing PST exemption on soft drinks, British Columbians will actually not be able to see the impact of the change on the shelves.

B.C. finance minister previews budget
B.C. finance minister previews budget

“This is fundamentally unfair. This is not just on your average Coca-Cola, it is on all sweetened drinks,” she said.

The B.C. government ruled out a more comprehensive sugar tax when it adopted the Employer Health Tax to replace the revenues from Medical Services Plan premiums.

But some health-based organizations have been calling on the federal government to go further and put in an excise tax similar to taxes on cigarettes and alcohol.

“It’s a signal to the public that these products are not food necessity items and have little if any nutritional benefits and there are healthier alternatives like water. It’s a positive, behaviour nudge,” Jenny Byford of the Canadian Cancer Society said.

READ MORE: B.C. NDP government set to unveil 3rd straight balanced budget under ‘challenging’ circumstances

As part of the affordability agenda, the province is allocating funding to a pair of programs.

The BC Child Opportunity benefit, announced in last year’s budget, will launch in October. The benefit will be available to 290,000 families in the province. Families with one child will be eligible to receive up to $1,600 annually. For families with two children it goes up to $2,600.

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The government also announced a “new need-based” grant for low- to middle-income post-secondary students. An estimated 40,000 students will be eligible for up to $4,000 a year for programs under two years in length and up to $1,000 a year for programs two years and over.

The Greater Vancouver Board of Trade gives the budget a grade of B-minus, calling a “status-quo” budget.

Forestry rally to be held Tuesday at B.C legislature
Forestry rally to be held Tuesday at B.C legislature

“We were pleased to see investments in childcare and education. But there was nothing here to make our region a more competitive region,” board CEO Bridgitte Anderson said.

Childcare spending continues to grow but is marginally more than previous projections. The government says 28,000 children have been enrolled in the $10-a-day pilot program.

“When we were elected we set out with a plan with people at the heart of our work every single day. A budget is a reflection of that. Our plan is working and we are sticking to that,” James said.

“Budget 2020 is all about building on the progress we have made so far.”

For the first time in more than six years, ICBC is projected to turn a profit each of the next three years. The public insurer has been hemorrhaging cash, losing more than a $1 billion in each of the last two years.

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ICBC is expected to lose $91 million this fiscal year. But looking forward it is projected to bring in $86 million in revenues in 2020/21, $148 million in 2021/22 and $191 million the following year. The government is also pledging a freeze on basic insurance rates this year and an average 20-per-cent reduction in rates once no-fault style insurance comes into effect May 1, 2021.

“What is happening now with enhanced care is we are moving into a world where we are going to see substantial reductions in premiums and in turn we will see a major turn in the system to care and recovery,” ICBC CEO Nicolas Jimenez said.

The forestry industry continues to have an impact on the province’s bottom line. The province is projecting to bring in $867 million in revenues from the industry this year compared to the $1.14 billion the province projected for the same time period a year ago.

An additional $13 million over three years will go towards revitalizing the forestry sector.

“We as government are doing everything we can to strengthen the resiliency of the forestry sector while supporting the workers and their families as we see changes happen in the industry,” James said.

“Together these programs will reflect a coordinated cross-ministry approach to the immediate needs of forests communities as well as looking ahead.”

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Funding at the ministry of health is climbing over $22 billion for the first time ever. Only health and social services will receive spending increases. In total there are 13 ministry budgets with spending either cut or frozen.

Amid labour tensions between the province and the B.C. Teachers’ Federation (BCTF), the province is allocating $339 million in new funding over the next three years that will go towards hiring 4,200 new teachers.

BCTF President Teri Mooring says the funding will not address areas that are facing significant teacher shortages.

“What we are really concerned about and didn’t see reflected in the budget are our concerns about the teacher shortage. We are seeing a significant shortage on the North Coast, North Central and Peace regions were hundreds of uncertified folks are working, uncertified,” BCTF resident Teri Mooring said.

The B.C. Non-Profit Housing Association raising concerns over a delay in delivering on promises around housing. The organization says the province needs to ramp up its housing investments if B.C. is to meet its goal of building 114,000 rental homes by 2028. Instead, the province is delaying the completion of 2,400 affordable homes.

“Affordable housing is a key pillar in building a healthy and equitable society and economy in B.C.,” B.C. Non-Profit Housing Association CEO Jill Atkey said.

“There are a quarter of a million renter households in B.C. spending more than they can afford on rent, and we can only expect this number to grow.”

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The Urban Development Institute (UDI) says there is disappointment the province didn’t apply the exemption rules of the Speculation and Vacancy Tax on development lands to the Additional School Tax.

“Budget 2020 projects that British Columbia will see a decline in the number of new homes being built across the province, despite an increase in demand and an expected rise in prices over the next three years,” UDI CEO Anne McMullin said.

“Last year, B.C. recorded approximately 44,000 housing starts compared with 70,000 people moving to the province. In 2020, housing starts are expected to drop to 30,000, but the influx of new people to the province needing homes is expected to remain consistent, which will create even more strain on housing demand and pressure on home prices.”

— With files from The Canadian Press