Businesses in British Columbia will pay less in provincial corporate income tax as B.C.’s rate drops from 10.5 per cent to 10 per cent on January 1, 2011. This comes after the February, 2009 budget reduced the general corporate income tax rate to 10.5 per cent from 11 per cent.
In a recent statement, Finance Minister Colin Hansen said that “Keeping business taxes low is an essential part of maintaining a competitive tax environment that will attract investment, create jobs and move our economy forward. We have reduced taxes to some of the lowest levels in the country, and when combined with planned federal tax rate cuts, by 2012, the corporate income tax rate in B.C. will be the lowest of the G7 nations.”
BC, along with Alberta, will now have the lowest corporate income tax rate in the country. The province also has the lowest provincial income tax rate in Canada for individuals earning up to $118,000 annually.
Isabelle Simard, of Golden’s Numbers & Letters Business Solutions, has been a personal and small business tax preparer for over 10 years in the area.
“I personally think the half a per cent decrease is going to make a very minimal impact,” she said. “If your business is losing money, for example, paying less tax really isn’t going to help you at all.”
In this very, very tough economy, she continued, the government needs to put more support into small businesses. For larger businesses in town the .5 per cent may make a noticeable difference, but for the majority of business owners in Golden, that probably won’t be the case.
Kevin Cox, Chartered General Accountant from Cox and Company, agrees.
“It’s not going to make a big impact, especially for small businesses,” said Cox. “Say your business makes a hundred thousand dollars in a year, that half a percentage will save you around $25 in the end.”
Cox thinks the 15 per cent personal tax cut that was scheduled to go through in the New Year but was abruptly cancelled by Campbell during his resignation would have made a more significant difference.
A recent article in the Globe and Mail quoted Gregory Thomas, a director of the Canadian Taxpayers Federation, as saying that the prospect of sudden reversals in tax policy may lead to people postponing a decision about doing business in B.C.
“Any time you have uncertainty and confusion over tax rates, it is not good for the economy or business,” he said.
B.C. will now be tied with Alberta in having the lowest corporate income-tax rate in Canada. The tax cut is estimated to cost the province $90-million. This tax cut is part of a number of changes on January 1 that include an increase in medical service plan premiums of about six per cent, a new northern and rural homeowner benefit of up to $200 and new property tax credits for farmland and industrial property.
