Premier Christy Clark listens as Finance Minister Mike de Jong delivers his third budget speech in the B.C. legislature

Why cut taxes for the rich?

Is Premier Christy Clark paying off the "champagne-and-caviar set," or is there more to the income inequality debate?

VICTORIA – The B.C. government’s third straight budget surplus is the main battleground for provincial politicians this spring, with little else on the order paper to argue about.

The main conflict is over the tax cut for the rich that results from removing a two-year surtax on personal income greater than $150,000 a year. It’s an outrage, says the NDP, starving our threadbare government services of more than $200 million over the next three years.

NDP leader John Horgan set the tone in his reply to Finance Minister Mike de Jong’s budget speech:

“I can appreciate that the minister was celebrating with the champagne-and-caviar set, but the rest of British Columbia saw $700 million in increased fees and taxes on their backs.”

Old news, de Jong replied. It was a temporary surtax on high-income earners to help get B.C. out of its post-recession red ink, and it expired as it was legislated to do.

This political theatre doesn’t help people understand what’s actually going on. First, a lot of that red ink was B.C. Liberal blood from dismantling the harmonized sales tax and repaying Ottawa for that failed experiment.

Second, this temporary tax on the rich was a political strategy by de Jong and Premier Christy Clark, limping into an election most expected them to lose. De Jong’s debut budget in February 2013 also accelerated a small increase in corporate income tax, stealing two populist planks from Adrian Dix’s NDP platform.

Ending the surtax not only kept a promise, it kept B.C. competitive with Alberta on personal income taxes. High wage earners and many of their businesses are more mobile every year, which is why this year’s budget also extended tax breaks for high-tech and digital media companies.

Another tweak in de Jong’s budget was to increase the low-income cutoff for personal income tax from $18,000 to $19,000. Those with the lowest incomes are relieved not only of income tax but also medical premiums, which continue to march up by another four per cent, and are mostly paid by employers.

As with the federal election set for this fall, we will hear a lot about the burden on the vaguely defined “middle class.” In B.C. they have to dig deeper for car insurance, hydro, ferry rides and post-secondary tuition, while those top-hatted champagne-sippers party on with their tax holiday?

Well, not exactly. Here’s an assessment from Philip Cross, research co-ordinator at the Macdonald-Laurier Institute and former chief economic analyst at Statistics Canada.

Just after the 2013 B.C. election, Cross noted that Canada, its provinces, Europe and the United States have all been adjusting their tax systems to increase the load on wealthier people and ease it from the poor.

This has closed the wage gap considerably in Canada. By 2010, the top 20 per cent of earners were paying 58.3 per cent of all income taxes. That’s up from 50 per cent in 1976, showing how long Canada’s income taxes have been “progressive.” This is the main reason why “income inequality,” that other great cause of the left, started leveling off in Canada around 1998.

Cross points to measures like the low-income exemption from income tax. By 2013, the bottom 40 per cent of Canadian households were paying just 6.8 per cent of income taxes, and more than a third of income tax filers were paying none at all.

Cross asks and answers the central question: Should the rich pay more? “If it’s a misinformed attempt to compensate for imaginary losses of low-income people, the answer is clearly no.”

Tom Fletcher is legislature reporter and columnist for Black Press. Twitter: @tomfletcherbc

 

Just Posted

Highway 7 down to one-lane alternating as crews fight Mt. Hicks wildfire

150-hectare blaze prompted closure of a provincial park

Night patrol on Chilliwack waters leads DFO to seize 48 sockeye and harbour seal from poachers

Charges pending after two poachers arrested for fishing at night

WATCH: Recruitment set to start for the Molson Coors Brewery at Chilliwack

There were about 1,000 jobs during the construction phase and some staff now being sought

Chilliwack goes cluck-cluck for chickens ahead of civic election

With an election in sight, urban chickens supporters ramp up their efforts for legal acceptance

Wildfire smoke brings in air quality advisory for Lower Mainland

People with health conditions are urged to avoid the outdoors

Average Canadian family spends 43% of income on taxes: study

Fraser Institute’s consumer report shows taxes accounting for larger chunk of income each year

RCMP to search for body after man drowns in B.C.’s Buntzen Lake

Officers and fire crews responded but the man from the Lower Mainland is believed to have drowned.

Police chiefs call for stricter controls on pill presses to fight opioids

Canada’s police chiefs are urging Ottawa to beef up its fight against the opioid scourge by closely vetting people who import pill presses

Hot, dry conditions forces drought rating to highest level on Vancouver Island

The province says Vancouver Island is under Stage 4 drought conditions

Victoria police say explicit calls continue to target women

Over 50 reports of unwanted, sexually explicit calls have come in

‘It’s like a party in your mouth’

B.C. creator’s Milkshake Burger makes its debut at the PNE

Get involved in the Great Canadian Bumble Bee Count

Environmental organization develops app to help with the nationwide count

Pesticides linked to bee deaths will be phased out in Canada, sources say

Neonicotinoids, or neonics, are a class of pesticides used by farmers and hobby gardeners alike

Most Read