Highlights include movement towards fixing PST and cut to small business tax rate
Today’s BC budget brought some good news for small businesses. The government balanced the budget, began phasing out the PST on electricity costs, reduced Medical Services Plan (MSP) premiums, and lowered the small business tax rate from 2.5 to 2 per cent. In all, the budget brings over $100 million annual tax savings for small businesses across British Columbia.
“In recent CFIB surveys, the top priority of BC small business owners’ is for the provincial government to balance its budget,” said Richard Truscott, Vice-President of BC and Alberta. “It’s encouraging to see a fifth consecutive balanced budget, one of the only provinces in the country that can make that claim.”
Since returning in 2011, the PST has consistently topped the list of irritants faced by small business owners. This budget brings some relief from the negative impacts of the tax. Starting October 1, 2017, the PST paid on electricity bills will be halved from 7 per cent to 3.5 per cent, saving small businesses an estimated $25 million. By April 2019, the tax will be entirely removed.
“This is an important first step towards fixing the PST,” adds Truscott. “While there is much more to be done, the budget starts the government down the road toward curing this massive headache for BC business owners.”
After increasing the minimum wage in 2016 more than expected, the budget also provides a reduction in the small business income tax rate from 2.5 per cent to 2 per cent in April 2017 as an off-set. The BC rate is now the second lowest in the country, tied with Alberta and Saskatchewan, but is still behind Manitoba which sits at zero.
In addition, the budget halved MSP premiums paid for approximately two million BC citizens. While a reduction to MSP premiums ranks lower on the list of priorities than a cut in the small business rate or removing the PST from business inputs, it will definitely benefit many entrepreneurs.
“Overall, this is a solid budget for BC businesses,” concluded Truscott. “With the election quickly approaching, we hope to see further commitments from all parties towards a plan to support small business, especially how to finish fixing the PST.”