The total number of housing starts across British Columbia is forecast to see a tumble over the coming years, but the provincial government still anticipates to see its housing-related revenues rise.
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According to the 2019 budget, housing starts for 2018/19 were 40,857 units, and this will fall to 34,015 units for 2019/20, 31,946 units for 2020/21, and 30,517 units for 2021/22.
Despite falling housing start volumes, revenue generated by the new speculation and vacancy taxes is anticipated to be relatively high – increasing from $87 million in 2019/20 to $185 million for each of the forthcoming three fiscal years.
Overall residential revenues will also rise from $951 million in 2019/20 to $1.146 billion in 2019/20, $1.183 billion in 2020/21, and $1.219 billion in 2021/22.
BC Finance Minister Carole James told media that the provincial treasury has already lowered its previous estimates for the revenue it expects from the property transfer tax, and it will make changes as needed.
“We are continuing to monitor it. We don’t control all the levers… it will be important to see where interest rates go, it will be important to see if the federal government makes any changes on mortgage rules,” she said.
“We are seeing some movement in the right direction. We are starting to see some moderation in the market and waiting to see some vacancy changes.”
Much of the provincial government’s significant spending measures announced in last year’s budget depends on rising revenues from both existing sources and the new sources, such as the speculation tax.
Overall, property taxes are expected to rise from $2.601 billion in 2018/29 to $3.25 billion in 2021/22.
Other revenue source increase projections include an uptick in the provincial sales tax to $8.282 billion by 2021/22 from $7.318 billion in 2018/19, personal income tax to $12.11 billion in 2021/22 from $11.348 billion in 2018/19, and fuel and carbon taxes to $3.237 billion in 2021/22 from $2.474 billion.
However, corporate income tax will see a significant drop from $5.132 billion in 2018/19 to $4.192 billion in 2019/20, before rebounding to $4.859 billion in 2021/22.
As for overall budget outlooks, the latest budget anticipates surpluses of $274 million in 2019-20, $287 million in 2020-21, and $585 million in 2021-22.
The last fiscal year also saw upheaval to the structural budget; the provincial government is reporting that it is now free of operating debt – the first time in over 40 years.