Finance minister Colin Hansen announced Tuesday the provincial government has reduced this year’s projected deficit from $1.74 billion to $1.4 billion.
The figure was part of Hansen’s first quarterly report.
Business sector taxation improved the province’s four-year fiscal outlook by $2.7 billion when compared with Budget 2010. That improvement is thanks to an additional $2.5 billion in corporate income tax revenue during the next four years.
Hansen said the additional revenue would allow the government to make $2.1 billion available over the next three years for tax reduction or additional spending.
“These results show how vital B.C.’s strong and growing corporate sector is to our economy,” Hansen said.
But chief among the government’s concerns going forward is the possibility of a “double-dip” recession in the U.S., the ongoing sovereign debt crisis in Europe and weaker than expected demand for B.C. exports.
Those concerns have led the government to forecast the B.C. economy’s growth this year at 3.1% compared with a private sector forecast of 3.6%.
The conservative estimate continues into 2011 when the government expects economic growth to be 2.2% compared with a private sector estimate of 3%.
Said Hansen: “Significant volatility still exists in the American and global markets. We need to maintain fiscal discipline, and build on the competitive tax environment we’ve created to ensure our economy continues to improve.”