Balanced Budget and Steady Growth Keeps B.C. Well Positioned in Canada
While province heading in right direction, competitive investment climate vital to economy
VICTORIA, Feb. 18, 2014 /CNW/ - B.C.'s Chartered Professional Accountants (CPABC) feel today's provincial budget is heading in the right direction, but has room for improvement when it comes to creating a more competitive investment climate. Modest economic growth and fiscal restraint has allowed the B.C. Government to balance the budget and reduce the debt-to-GDP ratio over the next three years. However, there is no move towards making B.C.'s sales tax more competitive, which will have both a short and long term impact on B.C.'s economy. The government must also maintain its commitment to competitive tax rates.
"While we applaud the overall fiscal management of the provincial government, we remain concerned about other factors that are creating an opportunity cost in the province," said Richard Rees, CPA, FCA, CEO of CPABC. "The loss of input tax credits through the re-introduction of the PST in 2013 increased costs to business by $1.5 billion, and has led to decreased investment in the province over the short term, and will impact productivity and job creation over the long term. Ensuring competitive corporate tax rates is also vital, and now that we're seeing a budget surplus we would expect government to keep to its commitment to implement competitive rates as quickly as possible, especially to keep pace with Alberta, which has no provincial sales tax, a seven per cent advantage."
In its recommendations to the Select Standing Committee on Government Finance, B.C.'s CPAs urged the government to move towards a competitive Value Added Tax system in line with B.C.'s peers. In Budget 2014-15, no adjustments to the sales tax regime are indicated, and corporate tax rates will remain 10 per cent higher than Alberta's through 2016-17.
"While we are disappointed to see no mention of B.C.'s sales tax regime in this budget, we are pleased that the government is moving forward with announcing a liquefied natural gas tax strategy, which was also included as part of our recommendations in October 2013," continued Rees. "This is a first step in providing the certainty investors need, and major investments in this sector will hopefully proceed as planned."
According to a 2012 report by the Canadian Energy Research Institute (CERI), the proposed LNG facilities in B.C. would generate about $150 billion in tax revenues and $500 billion in GDP growth across Canada over the next 25 years. The CERI report also estimates the industry would directly employ an additional 28,000 people in B.C. over the 12,000 it currently employs. The LNG Income Tax will be implemented through legislation introduced this fall. With a tier-one rate of 1.5 per cent and a tier-two rate of up to seven per cent, B.C.'s LNG tax and royalty regime would be one of the most competitive among leading LNG producing jurisdictions.
"A strong economy and tax base will generate the revenues needed in order to provide the public services all British Columbians rely on," finished Rees. B.C.'s economic growth is forecast to be higher than the national average in 2015 and beyond, and its debt-to-GDP ratio will peak at 18.5 per cent in 2013-14 and decline to 17.8 per cent in 2016-17, allowing B.C. to maintain its AAA credit rating.
Other Budget highlights include:
- $350 million for families, individuals, and community safety.
- $2.5 billion for health care with an average growth rate of 2.6 per cent (by 2016-17, total health spending will reach $19.6 billion, more than 42 per cent of all government spending).
- $17.7 million for 1,000 new licensed childcare spaces and $15 million for the Learning Improvement Fund.
- $11 billion in capital projects: $3.4 billion in transportation investments: $2.3 billion for capital spending by post-secondary institutions across B.C.; $1.5 billion to maintain, replace, renovate, or expand K-12 facilities; and $2.6 billion on health-sector infrastructure.
BC's professional accounting bodies, the Institute of Chartered Accountants of BC (ICABC), the Certified General Accountants Association of BC (CGA-BC), and the Certified Management Accountants Society of BC (CMABC) have signed a merger agreement and are working together to establish the Chartered Professional Accountants of BC (CPABC). Currently, accounting bodies representing all of Canada's professional accountants in every jurisdiction are committed to unification or have already merged under the CPA banner. ICABC, CGA-BC, and CMABC protect the public interest through rigorous educational and certification programs to uphold the highest professional standards and ethics. The ICABC represents over 11,000 members and just over 1,800 CA students; CMABC represents almost 5,000 members and 1,000 CMA students and candidates; and CGA-BC represents almost 11,000 CGAs and nearly 5,000 CGA students.
Audio with caption: "Audio: CPABC's CEO Richard Rees speaks about today's BC Provincial budget.". Audio available at: http://stream1.newswire.ca/media/2014/02/18/20140218_C5229_AUDIO_EN_36842.mp3
Audio with caption: "Audio: The Chartered Professional Accountants of British Columbia's budget response team provides its impressions of B.C.'s 2014 budget. CEO Richard Rees also outlines some highlights.". Audio available at: http://stream1.newswire.ca/media/2014/02/18/20140218_C5229_AUDIO_EN_36843.mp3For further information:
For media enquiries, contact:
Kerri Wilcox, Director of External Affairs (ICABC)
Telephone: (604) 488-2625
Diane Chung, Vice-President, Marketing and New Business Development (CMABC)
Telephone: (604) 484-7003
Edward Downing, Director, Communications & Marketing (CGA-BC)
Telephone: (604) 730-6208