The first bite of the COVID-19 pandemic cost B.C. $595 million, with plunging tax revenues and soaring spending reversing economic growth this spring.
B.C. Finance Minister Carole James released the province’s audited public accounts Aug. 31, showing the initial impact of the coronavirus measures on the economy up to the end of March. A projected surplus was quickly replaced by a deficit of $321 million, $597 million lower than the surplus that had been predicted in the February 2020 budget.
The true impact of the pandemic is still unfolding. The province suspended business payments for sales tax, employer health tax and hotel tax, and has reserved $1.5 billion for further business relief may affect the final result.
The B.C. Liberal opposition has called on the NDP government to forgive the deferred taxes collected by struggling business. Surrey South MLA Stephanie Cadieux, the party’s finance critic, said B.C. is lagging behind other provinces in developing an economic recovery plan.
“Today’s public accounts showed that revenues were slowing well before the pandemic,” Cadieux said. “This is entirely due to the NDP’s lack of economic vision and continued reliance on raising taxes to fulfill their plans.”
The B.C. Liberal opposition has called on the NDP government to forgive the deferred taxes collected by struggling business. The finance ministry has already estimated that the current year’s deficit will end up at $13.5 billion by the time it ends next spring, with an additional $1 billion borrowed this summer to match federal aid to transit and other economic supports.
James said the Insurance Corp. of B.C. saw $285 million less revenue that forecast due to the early weeks of the pandemic, with people cancelling insurance or delaying renewals. The pandemic effects include $397 million less personal income tax revenue and $171 million less in property taxes.
James emphasized that B.C.’s credit rating and debt were in a strong position to deal with the pandemic.
“We started with zero operating debt, a triple-A credit rating and the lowest unemployment rate in the country,” James said.