Budget 2009: Canada’s Economic Action Plan - Background information for BC

January 27, 2009

Federal transfers to BC

British Columbia will continue to receive support through major federal transfers in 2009-10:

• Federal support for provinces and territories is at an all-time high, and it will continue to grow.  For British Columbia, this totals $5.3 billion in 2009-10, an increase of $200 million from last year and $503 million since 2005-06.  This long-term, growing support helps ensure that British Columbia has the resources required to provide essential public services, and contributes to shared national objectives, including health care, post-secondary education and other key components of Canada’s social safety net.
• $3.2 billion through the Canada Health Transfer, an increase of $75 million from last year, for a total of $24 billion for all provinces and territories. CHT will continue to grow annually through a 6 per cent escalator.
• $1.4 billion through the Canada Social Transfer, which will provide provinces and territories with $10.9 billion, including an additional $800 million for post-secondary education.  CST will continue to grow annually through a 3 per cent escalator, beginning in 2008-09.  For British Columbia, this payment represents an increase of $243 million since 2005-06 – an increase of 20.5 per cent – due mainly to the move to an equal per capita cash allocation of the CST.
• British Columbia will also benefit from continued targeted support in 2009-10, including:
• $192 million as its share of the following: the $1.5 billion Clean Air and Climate Change Trust, the $1 billion Community Development Trust, the $612 million Patient Wait Times Guarantee Trust, the $500 million Public Transit Capital Trust 2008, the $400 million Police Officers Recruitment Fund, and the $300 million HPV Immunization Trust.
• $67 million for labour market training as part of a commitment of $500 million a year in new funding to provinces and territories, beginning in 2008‑09.

Initiatives that will benefit BC

The Economic Action Plan will deliver significant impacts for British Columbia:

• Action to Stimulate Consumer Spending. Providing $8.3 billion for the Canadian Skills and Transition Strategy and delivering $20 billion in personal tax relief over 2008-09 and the next five fiscal years.
• British Columbia taxpayers will receive benefits totalling $995 million over the next two years.
• British Columbia will benefit from the national $1.9 billion for skills upgrading and $1.9 billion to strengthen benefits for the Employment Insurance program, as well as an additional $4.5 billion to keep EI rates low for 2009-10.  Much of this funding will be distributed according to the province’s share of the unemployed, which will help respond to economic conditions in British Columbia.
• Immediate Action to Build Infrastructure.  Accelerating and expanding recent historic investments in infrastructure with almost $12 billion in new infrastructure spending over five years.
• Provides British Columbia with its share of $4.5 billion over two years for infrastructure projects such as the Evergreen transit line in Vancouver.
• Accelerates payments up to $75 million over two years for infrastructure projects in British Columbia.
• Action to Stimulate Housing Construction.  Providing $8.4 billion to build quality housing, to stimulate construction and enhance energy efficiency.  Measures include a renovation tax credit providing up to $1,350 to an estimated 4.6 million Canadian homeowners.
• British Columbia will receive its share of the investments in social housing.
• Implements a temporary Home Renovation Tax Credit (HRTC), which will benefit homeowners in British Columbia up to $419 million over two years.
• Action to Support Businesses and Communities.  Addressing short-term economic challenges facing sectors, regions and communities as a result of the global economic crisis. 
• Supports the forestry sector with $170 million nationally over two years.
• Invests $500 million nationally in the agriculture industry.
• Supports shipyards with a $175 million investment nationally.
• Invests over $246 million nationally in cultural and arts programming and the tourism industry.

Tax Relief for BC

Since coming to office, this government has provided $24.9 billion in tax relief to the people and businesses of British Columbia.  Over this and the next five fiscal years, additional tax reductions in Budget 2009 will provide the people and businesses of the province with tax relief of $3 billion dollars, including:

• $1.5 billion through income tax relief in the form of increases in the basic personal amount and upper limits of the two lowest personal income tax brackets;
• $185.3 million through raising the income thresholds at which the National Child Benefit supplement and the base benefit of the Canada Child Tax Benefit are phased out, providing up to $436 for a family with two children;
• $438.5 million through enhancements to the tax relief provided by the Working
• Income Tax Benefit (WITB), which are expected to double the total tax
• relief provided through the WITB;
• $275.7 million through a $1,000 increase in the Age Credit amount effective in 2009, which will help eligible low- and middle-income seniors by providing up to $150 of additional federal income tax relief each year;
• $419.2 million through a temporary Home Renovation Tax Credit which will provide meaningful tax relief to help Canadian homeowners make improvements to their property while promoting broad-based economic activity, and $174.4 million in support for first-time home buyers through the $5,000 First-Time Home Buyers’ Tax Credit, to assist first-time home buyers with the costs associated with the purchase of a home, and a $5,000 increase in the Home Buyers’ Plan withdrawal limits, to assist first-time home buyers saving to purchase a home.
• $117.7 million through a two-year extension of the temporary 50-per-cent straight-line accelerated capital cost allowance (CCA) rate for investment in manufacturing or processing machinery and equipment in 2010 and 2011;
• $30.9 million through a two-year temporary 100-per-cent CCA rate for investment in computers after budget date and before February 1, 2011, providing assistance to businesses in all sectors of the economy; and
• $60.9 million through an increase in the amount of small business income eligible for the reduced federal tax rate of 11 per cent to $500,000, as of January 1, 2009.

BC specific projects

• An additional $81 million over the next two years to accelerate the cleanup of federal contaminated sites, including Fort Nelson Airport.
• A share of $2 billion to support deferred maintenance and repair projects at post-secondary institutions, including at the College of New Caledonia.
• $80 million to modernize and expand border service facilities, including at Huntingdon, Kingsgate and the Pacific Highway.
• $1.9 million for building, float, fire protection, service area and wharf repairs at the Steveston Harbour and $300,000 for wharf repairs at the Ladysmith Harbour.
• $40 million over two years to support tourism, including the Vancouver 2010 Winter Olympic and Para Olympic Games.