British Columbia ends 2015-2016 with larger-than-expected surplus

[Sheba]

British Columbia said on Thursday that it ended its 2015-2016 fiscal year with a larger-than-expected budget surplus, bolstered by higher tax revenues, including a 43.9 per cent jump in its property transfer tax revenues.

The western Canadian province ended the year with a surplus of $730-million, up from the $377-million projected in February, and said it remains on track to balance the 2016-2017 budget.

The province said it received $1.2-billion more in tax revenue in 2015-16 than forecast in its original budget, led by a $468-million jump in property transfer tax revenues compared with the previous year.

That massive rise was fuelled by increased activity and higher values in the property market, the province said in a statement. The province charges a transfer tax ranging from 1 per cent to 3 per cent on almost all property sales.

While housing prices have increased across much of British Columbia, the Greater Vancouver area has led the boom, with the cost of the typical residential property jumping 32 per cent to $917,800 in June.

The property transfer tax gains outweighed a sharp decline in revenues from the province's oil, gas and mining sectors, which have struggled in face of falling natural resource prices and delays to proposed liquefied natural gas projects.

Revenues from petroleum, natural gas and mineral industries fell by $464-million, compared with the previous year.

British Columbia, which has a AAA credit rating, said total provincial debt was $65.29-billion in 2015-16. The debt-to-GDP ratio, which peaked at 17.9 per cent in 2013-14, was 17.4 per cent, in line with estimates.

The Globe & Mail

...and this money will go into the gov's coffers instead of paying for much need infrastructure repairs and improvements because... ?

[Vin]

Should we say this surplus is mostly laundered money from China?

[WarrenC12]

Should give them plenty of election-buying cash.

[whatnext]

Great! So Christy can eliminate the PPT for properties under $1 million. Or eliminate the odious MSP premiums.

[Klazu]

Originally Posted by whatnext

Great! So Christy can eliminate the PPT for properties under $1 million.

This is what I am also thinking. Eliminate the tax completely from lower-tier properties (excluding cases where owner/agent is trying to flip it) but increase it significantly for properties over $2M.

I don't understand why the government is not trying to milk every single penny they can from these wealthy foreign buyers. They cannot tell the differences in end price even if the tax is 5% or more.

[Caliplanner1]

Originally Posted by Klazu

This is what I am also thinking. Eliminate the tax completely from lower-tier properties (excluding cases where owner/agent is trying to flip it) but increase it significantly for properties over $2M.

I don't understand why the government is not trying to milk every single penny they can from these wealthy foreign buyers. They cannot tell the differences in end price even if the tax is 5% or more.

Klazu, why the arbitrary number of $2M? I would PROGRESSIVELY raise the tax significantly (as a portion of profits above the the $1M price tag) to help dampen speculation driven prices given that a curt research of inflation based purchasing power will show strain on most domestic personal/family budgets as house prices approach the million dollar mark.

[Hourglass]

Originally Posted by Caliplanner1

Klazu, why the arbitrary number of $2M? I would lower it to $1M since a curt research of inflation based purchasing power will show strain on most domestic personal/family budgets as house prices approach the million dollar mark.

Likely because $1M is only slightly above the average house price in Vancouver.

[Caliplanner1]

Originally Posted by Hourglass

Likely because $1M is only slightly above the average house price in Vancouver.

....well Klazu's strategy could have the unintended effect of raising the ceiling on Vancouver's average house prices before the potentially dampening effects of a progressive purchasing tax rate can kick in.

[WarrenC12]

The MSP is a joke and an insult. It brings in about $2.4B according to the latest budget. It could be made more progressive, but IMO should be eliminated entirely. They could then afford to tweak a few income tax brackets so it won't cost the full $2.4B in revenue. Done and done.

NDP should promise this today if they are paying attention.

[trofirhen]

Originally Posted by Caliplanner1

....well Klazu's strategy could have the unintended effect of raising the ceiling on Vancouver's average house prices before the potentially dampening effects of a progressive purchasing tax rate can kick in.

Not being a "finance person" I was was wondering by what process(es) or "dynamics" (explainable literally or with #numbers) you say Klazu's idea might cause an inadvertent $$spike.
Secondly, do Asian investors invest as heavily in other cities like San Francsco? Surely, but to what $/amount and where? I'm not sure if I know why Vancouver seems the "buying-in target"
Hey, panel, excuse me; I'm off-thread here.

[djh]

I was thinking that giving people any part of a refund of this money is frivolous. I mean, giving everybody in BC a cheque for $157 will buy them each a nice meal at a fancy restaurant...and then it will be forgotten.

I think these unexpected windfalls should go into long-lasting capital projects, that will have a visible legacy that everybody can benefit from for many many years.

How about something that we all want and would get pushed through a lot easier?

I propose that the capital expenditure be used to extend the Millennium Line extension from the planned terminus (Arbutus?) all the way out to UBC. This is something that (almost) everybody wants already, but the issue has really been about justifying the "extra mile" cost.

With this windfall, I think the authorities could nearly plug the gap in development cost. UBC, the First Nations (who plan on developing a neighbourhood around the golf course), and private developers could probably make up the difference, considering they would benefit greatly from such well-connected communities.

[Caliplanner1]

Originally Posted by trofirhen

Not being a "finance person" I was was wondering by what process(es) or "dynamics" (explainable literally or with #numbers) you say Klazu's idea might cause an inadvertent $$spike.
Secondly, do Asian investors invest as heavily in other cities like San Francsco? Surely, but to what $/amount and where? I'm not sure if I know why Vancouver seems the "buying-in target"
Hey, panel, excuse me; I'm off-thread here.

Just thinking here that there should be an effort to deter the tendency for real estate investors to bid up house prices over a million dollars via a heavy progressive tax that significantly eats into projected (sales) profits thus making such activity less financially attractive/rewarding.
.

[SFUVancouver]

I would be very happy if MSP were progressively rolled into regular tax revenue, as opposed to a separate levy. A lot of employers don't cover MSP (granted, many do, too) and it's a not-insignificant hit every month, on par with one's cell phone or internet. Plus, insult to injury, MSP doesn't go directly to health care. It goes to general revenue.

[WarrenC12]

Originally Posted by SFUVancouver

I would be very happy if MSP were progressively rolled into regular tax revenue, as opposed to a separate levy. A lot of employers don't cover MSP (granted, many do, too) and it's a not-insignificant hit every month, on par with one's cell phone or internet. Plus, insult to injury, MSP doesn't go directly to health care. It goes to general revenue.

Yes, it is purely a tax with a different name. It goes into general revenue, and you aren't denied care if you don't pay it (because that would be illegal by the Canada Health Act).

What it does do is allow the BC Liberals to claim "lowest income tax rates in Canada", which is complete bullshit.

[SFUVancouver]

Originally Posted by WarrenC12

Yes, it is purely a tax with a different name. It goes into general revenue, and you aren't denied care if you don't pay it (because that would be illegal by the Canada Health Act).

What it does do is allow the BC Liberals to claim "lowest income tax rates in Canada", which is complete bullshit.

I agree entirely. It would not be dissimilar to a city having "0%" property tax and boasting far and wide to having the lowest property taxes in the land. Of course there's the small matter of the annual premium for owning property in the city that is paid based on a mill rate formula, but that's not property tax! No, no, no. It's a "premium!"

[AForce]

how about paying down some of that debt?

[WarrenC12]

Originally Posted by AForce

how about paying down some of that debt?

I believe that is where it automatically goes. Especially since the books are closed, this was for the fiscal year ended March 31, 2016.

That said, our debt-GDP ratio is excellent, and interest rates are at historic lows. Borrowing money for infrastructure and capital projects that will benefit the province in the long term is nothing to be scared of.

[Genauso]

They'll pay down debt on paper, but it's a lie.

They just take cash out from Crown Corporations like BC Hydro or ICBC, and leave a debt on those books. Just like all the Public-Private-Partnerships have debt that isn't counted officially on the Province's books, even though the Port Mann bridge is a blackhole sucking up transportation funding. The truth is it's their debt if they can't stop making payments on it.

If it weren't for real estate taxes, the picture would be terrible. Mining, forestry, oil&gas... not contributing what they used to, Clark's number one priority and grand vision of LNG that she campaigned on is literally a big fat zero. She wouldn't be closing schools ahead of an election if the situation weren't a disaster

[Tfreder]

Originally Posted by Genauso

They'll pay down debt on paper, but it's a lie.

They just take cash out from Crown Corporations like BC Hydro or ICBC, and leave a debt on those books. Just like all the Public-Private-Partnerships have debt that isn't counted officially on the Province's books, even though the Port Mann bridge is a blackhole sucking up transportation funding. The truth is it's their debt if they can't stop making payments on it.

If it weren't for real estate taxes, the picture would be terrible. Mining, forestry, oil&gas... not contributing what they used to, Clark's number one priority and grand vision of LNG that she campaigned on is literally a big fat zero. She wouldn't be closing schools ahead of an election if the situation weren't a disaster

You do have to give Clark the benefit of the doubt, as I doubt many people could have predicted the collapse in oil and gas prices we've experienced in the past few years. If it wasn't for that, which was completely out of her control, her LNG plan would have been a huge boost for our economy.

[WarrenC12]

I give the Liberals some credit for their financial performance. It isn't all luck that we are where we are. However it's not all due to their management either.

My only issue is the way they've gotten here. It will be very telling what they do with this windfall.