The B.C. government has scrapped a planned medical premium increase next year now that the province’s surplus has ballooned to nearly $2 billion.
The red hot real estate market is a big factor behind the improved financial picture detailed in the first quarter budget update released Thursday.
Property Transfer Tax revenues for 2016 are now forecast at $2.1 billion – an increase of $965 million over the budget – with $165 million projected to come from the new 15 per cent tax on foreign buyers of Metro Vancouver homes.
The property transfer tax now far eclipses the $1.2 billion in forecast gambling revenue from the B.C. Lotteries Corp. and is just short of the $2.35 billion B.C. gets from all forestry, natural gas and other resource royalties.
The currently forecast surplus for the year of $1.94 billion is up from $264 million in the budget. And that’s after the province set aside $500 million for new housing priorities and other yet-to-be-announced measures.
“About half the value of the increased revenue from the Property Transfer Tax – $500 million – will be invested in new programs to benefit housing affordability and $400 million will be invested in the B.C. Prosperity Fund as a legacy for future generations,” Finance Minister Mike de Jong said.
The province is forecasting stronger 2.7 per cent economic growth for B.C. for 2016, up 0.3 per cent from budgeted.
The B.C. government now forecasts continued balanced budgets with surpluses of at least $900 million in each of the next two years.
De Jong said the higher revenues have allowed the government to cancel its planned four per cent increase to Medical Services Plan premiums set for Jan. 1 that would have increased costs for an adult by $36 a year. Premiums will go down four per cent for those who are eligible for premium assistance.
Canadian Taxpayers Federation B.C. director Jordan Bateman said the MSP premium freeze is a positive step but no great cause for celebration.
“This comes after 15 years of straight increases, more than doubling it on their watch,” he said. “So we’re not planning a parade for these guys and we still want to see (MSP premiums) scrapped completely.”
Bateman said the B.C. government uses medical premiums, rather than some more direct form of taxation for health care, so it can claim low overall taxes compared to other jurisdictions.
“A family like mine is paying $150 a month in this tax, yet it’s not calculated as part of the overall tax burden by government.”
He said the move to scrap the MSP hike shows the government is feeling pressure on cost-of-living issues.
Bateman also cautioned that revenue from the Property Transfer Tax may have peaked if the foreign buyers tax has indeed cooled what was a frenzied market with record sales and fast price gains.