British Columbia to See Surplus in 2013-14 Amid Asset Sales
February 23, 2012, 9:17 AM ESTBy Christopher Donville
(Updates with Falcon quote in fourth paragraph.)
Feb. 21 (Bloomberg) -- British Columbia, Canada’s third- most-populous province, will narrow its budget deficit in the next fiscal year before swinging to surplus amid higher corporate taxes and asset sales, Finance Minister Kevin Falcon said today.
The province will see a C$968 million ($971 million) shortfall in the year that begins April 1, down from a projected C$2.5 billion gap in the current year, budget documents show. The fiscal plan projects a C$154 million surplus in the 2013-14 fiscal year and a C$250 million surplus the following year.
British Columbia may increase the corporate tax rate to 11 percent from 10 percent as of April 1, 2014, Falcon said, and will keep its small business tax rate at 2.5 percent, rather than allowing it to drop to zero at the end of March this year.
“The requirement to implement this tax measure will be re-evaluated in next year’s budget,” Falcon said.
“Some people may not agree with our decisions,” the minister said in prepared remarks in the provincial legislature in Victoria, the province’s capital. “Some will say we should disregard the bigger picture, pay no attention to the turmoil around us, and simply spend more, tax more, and pass the bill to the next generation.”
The fiscal plan assumes inflation-adjusted economic growth will ease to 1.8 percent in 2012, 0.4 percentage point less than the 2.2 percent private-sector consensus given to the government, following 2 percent growth last year. It also contains a C$200 million “forecast allowance” and a C$300 million contingency spending fund.
Debt Sales
The government plans to sell C$8.5 billion of debt in the 2012-13 fiscal year, up from an estimated C$7.1 billion this year, to help fund capital spending on projects such as the Port Mann Bridge near Vancouver. The government also plans to raise C$700 million through asset sales, including its liquor warehousing operations. March this year.
“We’re in a new age of austerity for governments in Canada,” Jock Finlayson, president of the Business Council of British Columbia, told reporters today. “Most provinces are looking to ramp down spending numbers, so B.C.’s not alone in that respect.”
The province, which sold two U.S.-dollar global bonds during current fiscal year, expects to sell C$7.7 billion of debt in 2013-2014 and about C$7 billion the following year.
--Editors: Paul Badertscher, Jacqueline Thorpe
To contact the reporter on this story: Christopher Donville in Victoria at cjdonville@bloomberg.net
To contact the editor responsible for this story: David Scanlan at dscanlan@bloomberg.net
