B.C. announces $500M for affordable housing on projected surplus of nearly $2B
Province says finances bolstered by growth in revenue from income and property transfer taxes
The B.C. government has announced a $500 million investment to help deal with housing affordability in Metro Vancouver after forecasting a first quarter budget surplus of $1.94 billion for the 2016-17 fiscal year.
The province says it will release details of its plans for the housing money next week.
The province initially forecast a budget surplus of $235 million for 2016-17, but says financial growth over the last three months has been bolstered by revenue from income and property transfer taxes that have come in at $2.26 billion more than expected.
"When you consider the fact our economy is growing at a rate that is not seen anywhere else in Canada, and all of these indicators including the amount that people are paying to government in personal income tax is going up at a rate far in excess of what we anticipated, that is a good sign," said Finance Minister Mike de Jong.
"Suffice to say it was been a pretty good year so far."
Property transfer tax breaking records
The bulk of the financial success has been attributed to record-breaking property transfer tax revenues that have mainly come from Metro Vancouver's red hot housing market.
The updated books show the tax brought in $965 million more than expected, with $500 million of that now earmarked for housing affordability.
The province is also expected to announce numbers for foreign homebuyers next week for the first time since putting a 15 per cent tax on foreign nationals in place.
Based on the budget projections provided on Thursday, the province is expecting the tax to bring in $165 million in the 2016-17 fiscal year.
That forecast is based on estimates foreign buyers will make up five per cent of the value of homes purchased in Metro Vancouver.
Before the tax was introduced, the province found foreign buyers made up 10 per cent of the value of homes purchased.
"No one knows for certain what the impact of the tax and other market forces and other measures will be on the real estate market. We are in a much better position now than we were six months ago to track it," said de Jong.
"Part of the rationale behind the introduction of the 15 per cent tax on foreign purchasers was to reduce the amount of property transfer tax the government takes in. We will see to what extent that occurs."
Income tax revenue has risen along with the property transfer tax, swelling government coffers by $1.3 billion more than expected.
The NDP is concerned the province is touting the strong economy in the lead-up to a provincial election without actually helping middle-class British Columbians.
"I think the thing that stood out to me is that the government wants you to believe that everything is fine in British Columbia.
But for many, many families, they are struggling. We know people continue to live paycheck-to-paycheck. We know we have stagnant wage growth, the second lowest in the country," said NDP critic Carole James.
As well as introducing new investment in housing, the province also announced $400 million for its prosperity fund.
It is also cancelling the four per cent increase to the Medical Services Plan premium that was set to come into effect, January 1, 2017.