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British Columbia is to phase out the provincial sales tax (PST) on electricity and reduce the small business tax rate.
In his 2017 Budget speech, Finance Minister Michael de Jong announced that, from October 1, the Government will begin phasing out the PST on electricity. The rate will be reduced from seven percent to 3.5 percent, and electricity will be fully exempted from PST from April 1, 2019.
The Government expects that, when fully implemented, the exemption will save businesses more than CAD150m (USD113.9m) a year.
Budget documentation also states that the Government will consider future steps to mitigate the negative effects of the PST and other business taxes "in the context of the province's fiscal situation and competing funding priorities."
De Jong also announced that the Government will reduce the small business tax rate from 2.5 percent to two percent from April 1, 2017. This will mean that British Columbia has the second-lowest small business tax rate in Canada. The measure will cost the Government AUD213m over three years.
British Columbia provides a dividend tax credit to prevent double taxation of dividend income that has already been taxed at the corporate level. As a result of the small business tax rate cut, the dividend tax credit rate on ineligible dividends will also be decreased, from 17 percent to 15 percent. This measure will be effective for the 2017 and subsequent tax years.
The Budget included the remaining tax-related measures:
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