Canadian Manufacturing

B.C. cuts medical premiums, small biz taxes after another budget surplus

Last week, the B.C. government announced it was time to pay back British Columbians after years of penny pinching, and earmarked $1 billion for a number of initiatives

February 22, 2017  by Dirk Meissner, The Canadian Press

VICTORIA—British Columbia’s government is staking its re-election on a nearly $1 billion cut in medical service premiums, a small business tax reduction and carefully targeted spending increases on education, health and child welfare in a 2017-18 budget that projects a fifth consecutive surplus.

Finance Minister Mike de Jong said Tuesday the government will move to eliminate unpopular medical service plan premiums, starting with a 50-per-cent cut next year that will see a family earning up to $120,000 annually saving up to $900 in 2018.

Last week, the government announced it was in the financial position to pay back British Columbians after years of penny pinching, and de Jong said it identified the medical premiums as having the greatest impact for families.

“The instrument, mechanism we have chosen is MSP premiums,” said de Jong. “We are instituting a dramatic cut in premiums as part of a strategy to ultimately eliminate them.”


Prior to the budget, the right-leaning Canadian Taxpayers’ Federation and left-leaning Canadian Centre for Policy Alternatives called on the government to axe the MSP completely, calling it unfair.

The premium brings about $2.5 billion in annual revenues. The cut, effective Jan. 1, 2018, reduces that amount by about $1 billion, de Jong said.

“We’re tickled pink,” said Jordan Bateman of the B.C. taxpayers’ federation. “This is the only tax in B.C. that kept going up year after year, 40 per cent over six years.”

Economist Iglika Ivanova of the centre for policy alternatives said she’s concerned the government gave up almost $1 billion in revenues by cutting the premium. The government could have explored tax increases for corporations and high-income earners to recover the revenue, she said.

De Jong did not side step the importance the budget will play in the May 9 election. The Liberals have been in power since 2001.

“In a few short months, British Columbians will convene an electoral shareholders’ meeting to consider not just the merits of this budget, but the progress we have made as a province,” he said in his speech to the legislature.

The 2017-18 budget also cuts the small business income tax rate to two per cent from 2.5 per cent and eliminates the provincial sales tax on electricity for business by 2019-20.

The $50.2-billion budget forecasts a surplus of $295 million, down from the $1.5-billion surplus forecast for the current fiscal year ending March 31.

The budget includes spending increases in areas where the government has weathered political controversy: education, housing and child welfare.

De Jong said B.C. is leading Canada in job creation and is expected to challenge Ontario, Alberta and Manitoba for the top performing provincial economy. The government is forecasting economic growth to hit 2.1 per cent in 2017.

While many Canadian governments fight deficits, B.C. is posting surpluses.

“Our balance sheet is the envy of the nation,” de Jong said. “Our economic performance is the envy of the nation.”

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