Upon forecasting a budget-surplus of about $1.94 billion for the first quarter of the 2016-17 fiscal year, the B.C. government has officially announced an investment worth $500 million to address housing affordability in the metro Vancouver area, as well as $400 million for the province’s prosperity fund. Further details are expected to be announced soon.
The initial estimated surplus was about $235 million, but revenue from property-transfer and income taxes in the past three months has amounted to $2.3 billion more than expected. According to Finance Minister Mike de Jong: “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. Suffice it to say it has been a pretty good year so far.”
The majority of this remarkable surplus is credited to “record-breaking” property transfer tax revenue in the province, especially in metro Vancouver, and the new foreign buyer tax produced about $965 million more revenue than originally expected. Based on projections, the province also expects the tax to raise about $165 million through the 2016-17 fiscal year.
“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,” de Jong said. “We are in a much better position now than we were six months ago to track it. 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.”