Jock Finlayson

Jock Finlayson

FINLAYSON: Where does the money come from? The B.C. government’s top revenue sources

Governments around the world have taken on mountains of debt during the pandemic to support the economy

The recent unveiling of new social and business restrictions by the Provincial Health Officer is a stark reminder that the COVID-19 saga is far from over, notwithstanding the arrival of vaccines. It is likely to take a few more months – at least – before life returns to something resembling normal. In the meantime, British Columbians will gain fresh insight into the state of the province’s economy and public finances when Finance Minister Selina Robinson tables the NDP government’s 2021 budget on April 20.

Governments around the world have taken on mountains of debt during the pandemic to support economic activity. B.C. is no exception, and the forthcoming budget will tally up the fiscal damage done to date. At last count, the province’s operating deficit for 2020-21 was on course to reach a record $13 billion, according to the Ministry of Finance. All of this sizable sum will need to be borrowed. The government didn’t expect a gusher of red ink when the previous budget was released in February 2020.

The return of big deficits highlights an important issue: apart from running deficits, which in B.C. were eliminated in the years leading up to 2020, where does the provincial government get the money to pay for services and programs? To answer this question, we look back at the most recent pre-COVID budget year, which ended on March 31, 2020.

In that year, the provincial government collected $58.7 billion from a mix of revenue sources. At a high level, the funds can be divided into two buckets. The first is “taxation revenues” derived from taxes paid by individuals and businesses. These include taxes on personal and business income, consumption, energy, alcohol and tobacco, property, real estate transactions, and much else besides. Taxes provided 57 per cent of the province’s revenues in 2019-20.

The rest came from “non-taxation revenues.” They consist of cash transfers to B.C. from the federal government, the net earnings of provincial Crown Corporations, natural resource royalties, and a grab-bag of fees and charges.

Looking more closely at the data, the accompanying table shows the province’s main sources of revenue in 2019-20.

Personal income tax has long been the number one source of cash for the provincial government, supplying 18 per cent of revenues in 2019-20. Next was money transferred to B.C. by the federal government (16 per cent), B.C.’s sales tax (13 per cent), corporate income tax (9 per cent), and the combined net earnings of provincial Crown Corporations (5 per cent). Other significant revenue sources are fees paid to education institutions, taxes on property and property transactions, direct natural resource royalties, the Employers’ Health Tax, and carbon and other fuel taxes. Added together, the top five revenue sources accounted for almost three fifths of the funds available to the B.C. government before the arrival of COVID-19.

Many of the revenue sources in the table have been dampened by disruptions caused by the pandemic. That’s a principal reason why the province will be posting a record deficit in 2020-21. However, most of the affected revenue streams have been rebounding since the summer and should continue to revive in 2021-22. This will narrow the size of the government’s annual deficit. But given the magnitude of the COVID hit to our economy, it will take time to return to a balanced provincial budget.

B.C.’s top revenue sources in 2020-21.

B.C.’s top revenue sources in 2020-21.

Restoring the economy to health is the best way to boost government revenues going forward. Indeed, fostering economic growth and job creation should be the primary focus of the 2021 provincial budget. The government should steer clear of tax and fee increases for now. If necessary, options for raising additional revenues can be considered once the economy has fully recovered from the epic COVID-19 shock.

Jock Finlayson is a senior policy advisor with the B.C. business council.

Like us on Facebook and follow us on Twitter.

Want to support local journalism? Make a donation here.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Savanah Sanchez with a likeness of herself in a Canucks’ uniform done by her mom Jessica. (Photo by Don Bodger)
Girl’s passion for hockey knows no bounds

No games, but extensive ice time for training beneficial to Sanchez

Fuller Lake Skating Club.
Figure skating and CanSkate awards presented on the ice

Deserving individuals still recognized in pandemic season

New logo unveiled. (Submitted)
Board of Education seeking feedback on 2021-2022 budget

Public helps determine the allocation of resources

Photo collage of loved ones lost to substance use and overdose. (Photo courtesy Moms Stop The Harm)
B.C. overdose deaths still rising 5 years after public health emergency declared

Moms Stop the Harm calls on B.C. to provide safe supply in response to deadly illicit drug use

John and Jeri Wyatt hope the upcoming North Cowichan public hearing will move things along toward exclusion of the Chemainus River Campground from the Agricultural Land Reserve. (Photo by Don Bodger)
Opportunity for input on campground ALR exclusion at public hearing

Matter back on the agenda after a late reprieve in 2019 for Chemainus River Campground owners

Demonstrators at the legislature on April 14 called on the province to decriminalize drug possession and provide widespread access to regulated safe supply across B.C. (Jake Romphf/News Staff)
Rally calls for decriminalization, safe supply on 5th anniversary of overdose emergency declaration

From 2016 to the end of February, 7,072 British Columbians died due to overdose

(Government of Canada)
Liberal MP caught stark naked during House of Commons video conference

William Amos, in Quebec, appeared on the screens of his fellow members of Parliament completely naked

Provincial health officer Dr. Bonnie Henry updates B.C.’s COVID-19 situation at the B.C. legislature, Feb. 1, 2020. (B.C. government)
B.C.’s COVID-19 case count jumps to 1,168 Wednesday, nearly 400 in hospital

Now 120 coronavirus patients in intensive care, six more deaths

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Moss covered branches are seen in the Avatar Old Growth Forest near Port Renfrew on Vancouver Island, B.C. Thursday, Sept. 29, 2011. THE CANADIAN PRESS/Jonathan Hayward
B.C. blockades aimed at protecting old-growth forests reveal First Nation split

Two Pacheedaht chiefs say they’re ‘concerned about the increasing polarization over forestry activities’ in the territory

Richmond RCMP Chief Superintendent Will Ng said, in March, the force received a stand-out number of seven reports of incidents that appeared to have “racial undertones.” (Phil McLachlan/Capital News)
‘Racially motivated’ incidents on the rise in B.C’s 4th largest city: police

Three incidents in Richmond are currently being invested as hate crimes, says RCMP Chief Superintendent Will Ng

Commercial trucks head south towards the Pacific Highway border crossing Wednesday (April 14, 2021). The union representing Canadian border officers wants its members to be included on the frontline priority list for the COVID-19 vaccine. (Aaron Hinks photo)
CBSA officers’ union calls for vaccine priority in B.C.

Border officers at ports including, YVR and land crossings should ‘not be left behind’

(Amandalina Letterio - Capital News)
Kelowna demonstrators show support for Vancouver Island logging activists

Two Kelowna men stood atop a pedestrian bridge on Harvey Avenue to raise awareness about old-growth forests

Most Read