With BC set to conclude its fiscal year ending March 31 with a budget surplus of $1.5 billion, and further surpluses projected for the next three fiscal years, the Investment Industry Association of Canada
(IIAC) has released a statement approving of the province’s fiscal management.
“[BC’s] public debt burden (measured as the ratio of debt-to-GDP) is forecast to decline to 15.9 percent in fiscal 2017-18,” the group said in a statement. “By contrast, the public debt burden in each of the two largest Canadian provinces, Ontario and Quebec, is roughly three times higher.”
The group also pointed out that with relatively low debt-carrying costs and a AAA credit rating resulting from sound financial management, BC has room to implement measures for tax competitiveness while ensuring that social spending remains on a sound footing. In particular, the group said it was “pleased” to see a cut to the small business tax rate from 2.5% to 2%. Other pro-business initiatives noted were tax credits for Scientific Research and Experimental Development (SR&ED) and venture capital, as well as a phase-out of PST on electricity bills for businesses over two years.
“Successful efforts to improve the business climate in the province will draw the attention of foreign and domestic investors as a place to invest capital,” said IIAC President and CEO Ian Russell. “[BC’s positive efforts] will boost the province’s competitiveness, leaving it less prone to cyclical downturns in the economy or in any particular sector.”
However, on a more somber note, Russel emphasized that the province can only do so much to achieve economic advancement. “The province needs to encourage the federal government to stay focused on the same competitiveness agenda,” he said.
While projections lean toward a growth slowdown that reflects uncertainty linked with US fiscal and trade policy, the delicate situation in Europe, and weaker-than-anticipated Asian demand, accelerated growth in the US economy is a real possibility. The IIAC warned that BC must be positioned not just to protect itself from slowing growth, but to be ready for expanding opportunities.
“BC has the fiscal scope to stimulate capital formation and attract foreign direct investment and the knowledge, technology, organization and management expertise that comes with it,” Russell said. “The province should capitalize on its fiscal strength.”
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