Lower corporate taxes, reduced revenues, resulted in ‘good’ budget

It would seem that at least two people are happy with Colin Hansen’s ‘stay the course’ budget – Mr. Hansen himself and John Pankratz, FCGA, the President of the Certified General Accountants Association of British Columbia (CGA-BC). Mr. Pankratz believes that this budget will help the province emerge from the global economic crisis. “While there are no new major initiatives, this is a budget that is based on prudent financial management and sound economic principles that will benefit small- and medium-sized business. And that’s good for British Columbia, which is good for you and me,” he says.

Mr. Pankratz notes that the government has little room to manoeuvre because of pressures to increase spending, while at the same time, having reduced revenues of more than $2 billion. However, “…we see some positive benefits from the new International Financial Activity act (IFA) and tax credits for companies involved in clean energy development and digital publishing that will boost investment and help new innovative types of companies grow and prosper.”

“The Minister clearly remains committed to reducing red tape, the costly regulations that hurt job creation. And he is staying the course on lower and more competitive corporate income taxes, which will see the elimination of the small business rate by 2012. This provides small business with the tools to create new jobs and greater opportunity for growth. Given the economic times and the potential risks to the recovery, that makes this a good budget, says Mr. Pankratz.

CGA also sees benefits from the introduction of the Harmonized Sales Tax. “While no tax is ever a good tax, the HST is a better tax than the current more complex PST/GST regime,” he comments. “CGA-BC favors the HST because it is more fair, more visible, more straightforward to implement and administer, and more conducive to businesses looking to grow and create jobs. Moving to the HST also reduces B.C.’s marginal effective tax rate on investment from 26.4% to 15.7%, a reduction of some 40%.

“So, like Team Canada did last weekend we have to put ourselves where the puck is going to be, not where it was. We have to make B.C. a better place to invest and do business. We need to be more competitive and ready to embrace the future, and the HST is good for that,” says Mr. Pankratz.

The Association is also pleased with the government’s commitment to return to a balanced budget by 2013/14. They say that while the province will run deficits totaling nearly $6 billion between 2009/10 and 2013/14, the debt to GDP ratio remains manageable. The province’s debt remains low compared to other provinces across the country.