Tax Memo: 2009 British Columbia Budget: Tax Highlights

On Tuesday, February 17, 2009, the British Columbia Minister of Finance, the Honourable Colin Hansen, introduced the province's 2009 budget. According to the Minister, the B.C. economy has been affected by the unprecedented global economic turmoil. Rather than increase taxes or dramatically reduce spending, the B.C. government will run its first deficit in five years. The budget has an estimated deficit of $495 million for 2009/10 and $245 million for 2010/11. These projected deficits are based on an economic decline forecast of 0.9% for 2009 and growth of 2.4% for 2010 and 2.6% for the following three years. Provincial legislation requires a return to a balanced budget by 2011/12.

The budget refers to the Premier's recent announcement supporting a $14 billion investment (of which $2 billion is cost-shared with the federal government) in various new and accelerated infrastructure programs including building and upgrades to roads, bridges, schools, housing and hospitals in the province. These investments are expected to create as many as 88,000 jobs. The budget forecasts government revenue of $38.8 billion for 2009/10, 39.8 billion for 2010/11 and $41.2 billion for 2011/12, an average annual increase of 2.3% over the next three years. The budget includes contingencies of $385 million for 2009/10 to cushion the fiscal plan from unexpected events. Total government expenditures are forecast to increase by an average of 2.4% annually over the next three years. Taxpayer-supported debt-to-GDP ratio is forecast to be 15.2% in 2009/10 and 15.7% in 2010/11.

Commencing 2010, the budget reduces the general corporate income tax rate and increases the personal income tax rate on non-eligible dividends. It also introduces or clarifies numerous provincial sales tax exemptions. This Tax Memo discusses these and other tax initiatives, many of which were announced previously.

The budget reiterates measures introduced in British Columbia's Economic Plan, delivered on October 22, 2008. These changes are discussed in our publication Tax Memo: 2008 British Columbia Economic Plan: Highlights.

Tax Memo: 2009 British Columbia Budget: Tax Highlights (107 KB) Download the full PDF Tax Memo.