Tuesday February 21, 2012

BC Budget News

Deficit of $968M Forecast Next Year

First-time home buyer's credit and housing rebates help industry

Released by the Certified General Accountants of BC


.C. remains on track for a balanced budget for 2013-14, but public debt continues to inch up, says Cindy Choi, FCGA, the Chair of  B.C.'s Certified General Accountants.

According to Minister of Finance Kevin Falcon, the province's taxpayer-supported debt-to-GDP ratio will reach a high of 18.3 per cent in 2014-15. "Despite this increase, B.C. should maintain its triple-A credit rating. This disciplined approach puts us in good company with the federal government, avoiding the financial crises of nations like Greece, Ireland, and Portugal," says Choi.

A deficit of $2.5 billion is predicted for 2011-12, dropping to $968 million for 2012-13. Surpluses of $154 million in 2013-14 and $250 million in 2014-15 are expected as the global economy recovers.

The Association also cautioned that spending will increase to $43.9 billion in 2012-13, reaching $45 billion by 2014-15. "While many of these increases are earmarked for health care and education, the Association's hope was that the government would find places to reduce expenditures in other areas by capping spending and finding new cost savings and efficiencies until the economy fully recovers," says Choi.

While the Association applauds measures like the elimination of the provincial jet fuel tax on international flights, it raises flags in two areas. The small business corporate tax rate will not be reduced as planned and will stay at 2.5 per cent. The caveat is that the rate will be reviewed once the province passes through the current economic slump.

The Minister is also calling for a provisional one-percentage point increase in the general corporate income tax rate from 10 per cent to 11 per cent, effective April 1, 2014.

"While these increases are relatively minor, these are subtle changes to the province's competitive position that could dampen economic growth at this critical time," says Choi. "Bolder action in this area would attract more investment, create new jobs and put additional money in the pockets of British Columbians," Choi says.

The Minister also showed a good command of the economic levers that he controls, offering a first-time home buyers' bonus of $10,000 which will provide a temporary, refundable income tax credit for buyers purchasing new homes. And increasing the BC New Housing Rebate threshold for home purchases to $850,000 effective April 1, 2012, will aid the housing industry. The maximum rebate will be $42,500.

As the province's largest professional accounting association, CGA-BC represents nearly 15,000 CGAs and students. Members work in industry, commerce, government and in public practice. The Association promotes the excellence of its members and advances the accounting profession through education, certification and the protection of the public interest.

CGA-BC leads the profession in the integration of ethics into its academic program, and all new graduates of the CGA program are required to complete a rules and standards course to complement an ongoing ethics requirement for members.

The Association also offers a wide range of employment services and programs to its members, students and the business community. These services include CGAjobs.org, a job postings website for finance and accounting professionals, and the Partners in Employment Program (PEP), which recognizes organizations that provide an effective working and training environment for CGAs and CGA students.


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