2020 BC Budget
The BC coalition government presented their 2020 budget on Tuesday February 18 and there has been much criticism about the potential impacts it will have to our economy.
While the broader economic impacts will be felt more in the long term, what most people want to know is what short term impacts these new proposals will have directly on their wallets. While there were many smaller changes in the budget, I wanted to highlight the four major changes that have been announced (plus two that weren’t):
New Personal Income Tax Rate – A new top personal income tax bracket is introduced effective for the 2020 and subsequent tax years. Taxable income exceeding $220,000 will be subject to a provincial personal income tax rate of 20.5 per cent, up from 16.8 per cent.
The top combined federal/British Columbia personal income tax rates will for the first time cross over the critical 50 percent mark. Ordinary income and interest will be taxed at a staggering 53.5% moving forward!
Child Opportunity Benefit – Announced in the 2019 budget, this new tax-free monthly payment is set to begin in October 2020. The maximum payment is $1,600 for the first child, $1,000 for a second child and $800 for each subsequent child under the age of 18.
If a family’s net income is more than $25,000 per year, the payment is reduced on a percentage basis. A two-child family’s payment will hit zero at $115,000 of annual net income.
The CRA will administer the program automatically using registration from the Canada Child Benefit program to determine eligibility so if you’re signed up for that, there’s nothing further you need to do to receive these funds.
BC Access Grant for Students – Effective September 2020, a new needs-based student grant program will provide low and middle-income students funding to help cover the costs of tuition. Between the new provincial grant and the Canada (federal) student grant program, eligible students can receive up to $4,000 a year.
In addition to full time students, the new BC Access Grant will be available to part-time students enrolled in programs of less than two years.
Sales Tax Exemptions on Sodas Eliminated – Effective July 2020, carbonated beverages that contain sugar natural sweetener or artificial sweeteners no longer qualify for the PST exemption for food products for human consumption. This will include all beverages dispensed through soda fountains/guns along with all beverages dispensed through vending machines (except vending machines wholly dedicated to dispensing beverages such as coffee or water).
$400 Renters Rebate Omitted – A cornerstone of the NDP’s 2017 election campaign was their promised $400 annual rebate for every renter in the province. This latest budget again made no mention of this promise being followed through on and Finance Minister Carole James avoided answering questions about the future of that program when asked during the release of this year’s budget.
Attracting Business Investments – The biggest item missing from this year’s budget was any kind of meaningful tax relief or measures to promote business here in BC. High taxes, an anti-business sentiment and a high cost of living for employees will continue to drive businesses to other provinces.
While some of the above newly launched programs sound great for lower income earners, the real challenge will be finding a way to pay for them all without meaningful investments from national and global businesses and customers.