NDP government unveils $5-billion COVID-19 relief plan atop tax deferrals, freezes

By Shannon Waters March 24, 2020

British Columbia announced a $5-billion response to address the COVID-19 pandemic Monday, with $2.8 billion focused on people and health services and $2.2 billion focused on businesses and recovery.

“The first step we are going to focus on with the action plan is making sure critical funding for health services is there now and going forward,” said Premier John Horgan at an afternoon news conference. “Direct financial support for people is in the package, as well as deferment of payments … and targeted tax relief as well. Parts of the plan will take effect right away, and other parts will take more time.”

The investment represents just over two per cent of the province’s GDP.

A new $1.1-billion Emergency Benefit for Workers will be issued in the form of a one-time, tax-free $1,000 payment, and eligibility will be extended to anyone who has been laid off, is sick or is quarantined. Parents who stay home to care for sick children or because of child care or school closures will also be eligible, as will people caring for sick family members.

It will be paid on top of the federal supports announced last week and will be available to B.C. residents regardless of whether they are eligible for employment insurance (EI) benefits.

An application system is expected to be up and running shortly, but the payments are not expected to begin arriving until May.

Another $1.7 billion will go to critical services, including immediate health-care needs; housing and shelter investments; rental support programs; and increased income and disability assistance. This funding will also support the government’s commitment to day care operators.

“I want to emphasize that this plan is a starting point,” Finance Minister Carole James said of the package. “It is going to have to evolve as the situation evolves, and we are going to do everything we need to to keep BC-ers safe, healthy and supported and to keep our economy strong.”

B.C.’s Climate Action Tax Credit is getting a five-fold boost and will deliver up to $218 per adult and up to $64 per child this year. Individual eligibility will be determined by 2019 tax returns, delivered in July and is expected to benefit 86 per cent of British Columbians.

Horgan, BC Liberal Leader Andrew Wilkinson, interim BC Green Leader Adam Olsen and Independent MLA Andrew Weaver took the unprecedented step of issuing a joint statement expressing their support for the legislation.

“As party leaders, we want to take this opportunity to speak with one voice and challenge every British Columbian to do their part to stop the spread of COVID-19,” reads the statement.

Businesses benefit from tax breaks and deferrals while $1.5 billion goes toward recovery

Of the $2.2 billion to aid businesses and eventual economic recovery, $1.5 billion will go toward recovery efforts. Those efforts will be informed by a provincial task force made up of representatives from “B.C.’s business and labour sectors,” per the finance minister.

“One key area that we are prioritizing is the hard hit tourism, hospitality and cultural sectors,” James said. “We’ve built into our plan support — details to come — to help the tourism, the arts and culture sectors survive the immediate crisis and also to help them come back strong in the future.”

Class 4, 5 and 6 properties — light- and major-industry classes — will see their tax rate cut in half, a move that’s expected to produce a $4,000 benefit for the average commercial property owner, according to the finance minister, and a $500-million cost to the province in the form of foregone revenue.

“We do expect that these savings will flow through to tenants who have triple net leases providing support to them as well,” James said.

A slew of other taxes will have filing and payment deadlines deferred until September 30, 2020. These include the employer health tax, provincial sales tax (PST), municipal and regional district tax, tobacco tax, fuel tax and carbon tax.

The province is also delaying the implementation of its tax on sweetened, carbonated drinks and new PST registration requirements for e-commerce. The carbon tax increase scheduled for April 1 will also be delayed.

Greater Vancouver Board of Trade president and CEO Bridgitte Anderson called the relief package a first step toward helping B.C. businesses survive COVID-19.“Cash flow is the highest priority right now for any business,” she told Global News. “They are trying to shore up what they have, so deferral of payments is certainly helpful.”

Down the road, businesses may need more than tax deferrals, Anderson suggested.

Any rent relief will wait till Wednesday

Yesterday’s announcement contained no specifics for B.C. renters.“No one will lose their apartment because of COVID-19,” Horgan promised. “That’s not to say that there are not tenants who are in various stages with their landlord for other reasons that have nothing to do with the pandemic, and those will continue.”

NDP MLA Spencer Chandra Herbert (Vancouver—West End), who chaired the province’s rental housing task force, conducted a “rapid consultation” with tenant and landlord organizations, per the premier, and that feedback will inform Municipal Affairs and Housing Minister Selina Robinson’s presentation to the NDP cabinet on Wednesday morning.

“She will [then] make public the details of our action plan components with respect to renters,” Horgan said.

Landlords getting breaks on mortgage payments should consider passing those deferrals on to their tenants, Horgan suggested.

Like James, Horgan emphasized that the province will be providing further details on yesterday’s action plan and announcing further initiatives in the days and weeks to come.

“We are going to have to manage issues as they emerge,” he told reporters. “The education sector is one of those sectors, forestry, and the list goes on. We have been trying as best we can to anticipate where those gaps are going to be and take steps to fill them.”

What lies ahead

The COVID-19 action plan is additional spending, on top of the $60-billion budget the NDP introduced in February, and is allocated by the supplementary vote that passed unanimously yesterday afternoon.The province’s balanced books are likely not long for the world.

“When it comes to revenues and government’s revenues, there is no question that we are impacted, as every jurisdiction across the world is impacted,” James said. “We will have more details as the next couple of months go along, as this fiscal year closes off and we move into the next fiscal year.”

The finance minister expects a full economic statement to be delivered in late August as part of the first quarterly report. It may be a grim update.“Whether we are talking about growth in our province, whether we’re talking about exports, imports, it doesn’t matter, tourism — every sector is impacted,” James said. “This is going to be a very challenging time.”

The NDP government is focused on spending as needed to stop the economic bleeding. Any stimulus efforts will come later.

“The notion of stimulus at a time when the economy is shrinking is something that you always look at, but we’re seeing rapid changes in the workplace, rapid changes within the North American economy, and everything that that entails,” Horgan told reporters. “Stimulus needs to be something we’re looking at in a month’s time. Today, we need to make sure we’ve got cash in people’s pockets, we’ve got cash flow corrective measures in place for businesses. There will be more to come as needed in the months ahead.”