B.C.'s cash-strapped homeowners get a break

Finance Minister Carole Taylor rejected calls to slice one percentage point off the provincial sales tax in favour of spending more than a quarter of a billion dollars on the B.C. homeowner grant.

She said she was investing $309 million to help "hard-working families and seniors on fixed incomes to address the challenges that come with soaring real estate values."

Asked if she was neglecting renters and the poor, Taylor said last February's budget provided relief for low-income families with measures that included reducing medical premiums and lowering taxes so that B.C. residents with incomes under $15,000 now pay no tax whatsoever and those in the lowest two brackets pay the lowest anywhere in Canada.

In addition, September's budget update increased grants to elderly renters and a series of initiatives in Tuesday's budget to help children will inevitably help families with low incomes.

Improvements to the homeowner's grant include:

- Increasing the basic grant by 22 per cent to $570, the first increase since 1993. For veterans, seniors and disabled people the grant is increased to $845 from $745.

- Raising the threshold to qualify for the full grant by $95,000 to $780,000 in assessed value, saving up to 27,000 homeowners from grant reductions and ensuring that more than 95 per cent of homeowners are eligible for the full grant.

Taylor also announced a series of tax cuts to encourage economic productivity, including eliminating the seven per cent provincial sales tax on all computer software services, including installation, modification, maintenance and eradication of viruses.

"This will provide an incentive for business as well as individuals to use computer technology and to use it to its fullest potential," she told the legislature.

In a measure she said would help British Columbians purchase diesel pickup trucks and similar vehicles for work, Taylor raised the PST surtax threshold for passenger vehicles from $49,000 to $55,000. PST on passenger vehicles in now levied at seven per cent to $55,000, eight per cent from $55,000 to $56,000, nine per cent at $56,000 to $57,000, and 10 per cent at $57,000 and above.

Taylor has also earmarked $25 million a year for an enhanced dividend tax credit to dovetail with the proposed federal reduction in income taxes on dividends.

Other productivity measures include:

- Expanding authorized uses of coloured gas and diesel fuel to include all motor vehicles not licensed to operate on a highway. Fuel injected with a red dye is subject to a reduced fuel tax of three cents a litre. In addition to farm tractors, road building machines and logging trucks, off-road vehicles now authorized to use coloured fuel include snowmobiles and all-terrain vehicles.

- Extending the B.C. mining flow through share tax credit to the end of 2008 which Taylor said would help maintain momentum in mining and mineral exploration.

- Broadening the PST exemption on production machinery and equipment to include businesses providing manufacturing services to companies that already qualify for the exemption.

(prepared by Michael Kane/Vancouver Sun)

LOWER EARNERS SEE LONG-TERM GAINS:

Provincial income taxes were reduced by an average of 25 per cent in 2001 and last year further income tax and Medical Services Plan premiums cuts helped low-income earners. Families in example made $30,000 a year, single person $25,000.

$1,354

Savings for two-income family of four

$3,739 2001

$2,850 2004

$1,018

Senior couple with an income

$3,391 2001

$2,373 2004

$645

Single individual

$2,129 2001

$1,484 2004

Includes provincial personal income tax, MSP premiums, fuel tax, sales tax and estimated municipal property taxes.

Source: British Columbia Ministry of Finance, Vancouver Sun

WALKING A FINE LINE:

REVENUE $35.4 BILLION

The province will take in $1.5 billion more than it spends in the coming fiscal year.

- $1.97 - Crown corporations

- $5.73 - Federal Gov't

- $5.18 - Fees, Misc.

- $1.41 - Medical Services Plan

- $4.85 - Natural resources

- $9.05 - Other taxes

- $5.8 - Personal income tax

- $1.34 - Corporate income tax

- $4.37 - Social services tax

- $1.61 - Fuel and tobacco

- $1.32 - Other taxes

- $1.73 - Property tax

EXPENSES $33.9 BILLION

This breakdown (in billions of dollars) shows major cost and income areas.

- $5.69 - Other

- $1.68 - Expenses

- $4.01 - Other spending: education

- $5.92 - Other ministries

- $1.37 - Employment and Income

- $11.9 - Health Ministry

- $5.19 - Education ministry

- $1.98 - Advanced education

- $1.84 - Children and Family Development

Source: British Columbia Ministry of Finance, Vancouver Sun