Economic challenges of COVID-19 matched by strong supports for people

Finances

Press release from the Ministry of Finance on September 10, 2020:

The COVID-19 pandemic's impact on provincial revenues and unprecedented government spending on supports for people and businesses has led to an updated provincial deficit forecast of $12.8 billion for the 2020-21 fiscal year.

The deficit is on track with the Province's July fiscal and economic scenario.

"The pandemic has threatened lives and livelihoods, and our government responded with one of the most supportive, comprehensive action plans in the country," said Carole James, Minister of Finance. "Since the Province's July fiscal and economic scenario, we have seen stronger than expected consumer spending, housing activity and employment gains. These gains are offset by increased prudence to help B.C. weather the long road ahead."

The Province's first quarterly report confirms revenue declines in taxation, natural resources and other sources that were anticipated in July. However, the overall impacts on revenues and expenses are lower, with a $5.7-billion decline from Budget 2020, compared to a $6.3-billion decline shown in the July scenario. Improvements from July's update include better than expected employment gains, retail sales and housing activity, resulting in revenue gains in provincial sales tax, personal income tax and property transfer tax.

The updated deficit forecast includes a $1-billion forecast allowance as part of government's commitment to economic prudence in response to the heightened uncertainty brought by COVID-19.

The first quarterly report also includes a summary of COVID-19 investments to date, with details of the $7.6 billion in COVID-19 response measures that have supported people and businesses since the beginning of the fiscal year.

The COVID-19 Action Plan has included supports such as workers benefits, rent supplements, income and disability assistance supports, and economic recovery funding. Another $1.8 billion in temporary relief measures for people and businesses include supports such as the Climate Action Tax Credit, pandemic pay for front-line workers and the reduction of school tax for commercial properties.

As part of the COVID-19 Action Plan, $1.5 billion has been earmarked for economic recovery measures to be announced in September.