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What the 2021 B.C. budget means for your business

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On April 20, 2021 the B.C. government tabled its budget. CFIB was looking for three main things in the budget to support small businesses as they recover from the pandemic: 

  • No new major taxes or costs put on to small businesses 
  • A commitment or plan to return to balanced budgets, 
  • Additional support or relief for those businesses who are still facing restrictions and for those businesses left out (especially new businesses)
  • We’re happy to report that the government acted on our first two recommendations, and there was some new relief. However, we also asked the government for some help containing your costs by increasing the threshold for the Employers Health tax – which the government did not to. 

What new spending was in the budget?

  • $100 million is being allocated to support tourism recovery, including support for major attractions that make British Columbia a unique destination. We’re not yet sure how much of this funding will be dedicated to help SMEs – the devil is in the details. 
  • $150 million is being provided to support the Increased Employment Incentive tax credit for private sector employers (this was also announced in the fall). This program provides a tax credit to businesses that increased payroll through hiring or compensation increases in the last quarter of 2020 compared to the previous quarter.
  • $35 million to help B.C. farmers keep temporary foreign workers safe from COVID-19.
  • $10 million to expand the Grow BC, Feed BC, Buy BC strategy to strengthen and expand the domestic market for B.C. products.

Taxes

There were no new major tax increases in this budget, which is good news and something we had pushed for. However Effective July 1, 2021, tobacco taxes will increase for:

  • Cigarettes from 29.5¢/cigarette to 32.5¢
  • Heated tobacco products from 29.5¢/product 32.5¢ 
  • Loose tobacco from 39.5¢/gram to 65¢.

There were some minor reductions:

  • Effective April 21, 2021, electric bicycles and tricycles are exempt from provincial sales tax (PST). In addition, conversion kits used to electrify conventional bicycles and tricycles, and parts and services for electric bicycles and tricycles, are exempt from PST.
  • Budget 2021 proposes to expand the eligibility for the B.C. emergency benefit for workers to include self-employed individuals if they would have qualified for the benefit or the Canada Emergency Response Benefit based on their gross income. This mirrors a federal change to the Canada Emergency Response Benefit.

When will we be back to balance? 

Despite the budget’s new spending on economic recovery, there were some signs that the province will return to stability. GDP is projected to expand for the next three years (after contracting in 2020) and unemployment is now above its 2020 average. 

While the debt is projected to increase over the next few years because of infrastructure spending, the government suggests that they will return to balanced budgets in 7-9 years. While that’s a long timeline, we’re glad to see the government taking this seriously.