BC government operating budget surplus soars by $5 billion

BC legislature in Victoria (Shutterstock)

The Government of British Columbia’s operating budget surplus has skyrocketed by $5 billion over the second quarter of the 2022/2023 fiscal year — up from $700 million in the first quarter.

This revenue figure is far higher than originally forecast and the provincial government has attributed this to a fast and strong economic recovery.

According to the fiscal update released today, the change was primarily driven by a significant update from the federal government’s Canada Revenue Agency for 2021 personal and corporate income tax results.

You might also like:

“The Second Quarterly Report shows that we have experienced a faster economic recovery than private- or public-sector economists initially forecasted,” said Selina Robinson, the BC minister of finance, in a statement.

“The changes we’re seeing are primarily due to updated income tax revenue data from the Canada Revenue Agency here in BC and across the country – far beyond what was forecasted when we built our budget.”

This includes personal income tax revenue levels being up by about $1.3 billion over forecasts due to stronger 2021 preliminary tax assessment information, which reflects the strong growth in employment as well as other sources of income, such as capital gains, dividends, and investment incomes in middle- and high-income tax filers. About $700 million is an adjustment relating to the previous 2021/2022 fiscal year, and $568 million is an ongoing base impact starting in the current 2022/2023 fiscal year.

Corporate tax income revenue is also up by about $2.8 billion, largely from an improvement in advance installment payments from the federal government and prior year settlement payments. This was driven by better-than-anticipated corporate financial performance in most sectors in 2021, especially in natural resources.

Provincial sales tax revenue has increased by $114 million, but tobacco tax revenue is down by $115 million.

Revenue from the property transfer tax is down by $300 million due to the slower housing market as a result of decreased demand and the impact of higher interest rates. Also, the foreign buyers’ tax revenue forecast has dropped from $104 million to $80 million.

Most economists anticipate Canada will enter into a recession by early 2023.

With the provincial government under the new leadership of Premier David Eby, major spending measures are expected to be introduced over the coming months, leading to the release of the 2023 Budget in release in late February.

You might also like: