Property transfer tax trimmed
Newly built homes worth up to $750,000 are exempt from B.C.’s property transfer tax under changes in the provincial budget that take effect immediately.
Finance Minister Mike de Jong expects to make up most of the lost revenue by increasing the tax rate from two to three per cent on the value of homes in excess of $2 million.
For resold homes, property purchase tax continues to apply at one per cent on the first $200,000 of value and two per cent on value between $200,000 and $2 million.
The tax has produced a windfall for the province and pushed home purchase costs even higher in the hot market for homes in some urban areas. The government expects to collect about $200 million more than it budgeted for the current year, due to soaring prices and a high number of sales.
De Jong said the break is aimed at new construction to stimulate new housing construction, adding to supply in response to demand that is driving prices up.
The exemption is only available to Canadian citizens and permanent residents, and the government is resuming tracking nationality of buyers, a practice stopped in 1998.
The upper limit to qualify for the homeowner grant is also increased from $1.1 million to $1.2 million for the 2016 property tax year.
Children exempted from MSP premiums
Medical Services Plan premiums are being charged only for adults starting in 2017, and the qualifying income for reduced premiums is going up from $30,000 to $42,000 for single people.
The new system creates a break for single parents, who will pay a single adult rate of $78 a month instead of the current rate of $150 charged for a family of three. A single senior or single parent with one child and an income of $45,000 may also be eligible for reduced premiums.
The changes will reduce rates for an additional 335,000 people, and 45,000 more people will be exempted from paying as long as they are registered and qualify. But rates overall continue to rise. With a four per cent increase in personal rate this year and growing population, the government expects to collect more MSP each year of its three-year budget plan than with the current system.
B.C. is the only province that charges premiums for health services, and the NDP opposition has called for them to be eliminated as a regressive tax. De Jong argues that MSP covers only 14 per cent of a growing health care budget, and eliminating it would amount to hiding the cost in the general tax system.
Prosperity fund gets seed money
With liquefied natural gas export projects delayed, Premier Christy Clark’s promise of a “B.C. Prosperity Fund” has been launched with $100 million from the current budget surplus.
The fund was touted in the 2013 election as a way to pay off debt starting in 2017, and reduce or even eliminate B.C.’s sales tax with revenues from five LNG plants. But with a glut of oil and gas internationally, no major project is expected to be under construction by the 2017 election.
Including the fund in his 2016-17 budget, Finance Minister Mike de Jong said most people would agree with “the notion that we would take a modest amount of money out of our chequing account and put it in our savings account.”
The finance ministry expects a surplus of $377 million at the end of the current fiscal year and $264 million in the fiscal year that begins April 1.
The prosperity fund is restricted to a minimum 50 per cent to pay down debt, 25 per cent saved to earn interest and the rest available to spend on health care, transportation and other government functions.
Disability benefits up $77 for some
Income assistance payments for people with disabilities are to increase up to $77 per month effective Sept. 1, but transit passes will no longer be covered.
Bus passes have only been provided for some regions of the province, an unfair situation for those who can’t take advantage of transit, said Finance Minister Mike de Jong. The increase will be across the board and recipients can choose for themselves if they use it for transit or other needs.
The B.C. Liberal government has resisted calls for an increase in the general social assistance rate, but has ended the clawback of child support payments to single parents.
Since 2012 the government has moved to encourage income assistance recipients to work, allowing earnings up to $200 a month without losing benefits for those who file tax returns.
People on disability assistance can retain up to $800 a month, up from $500 in 2012.