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

New Seven Sisters replacement confirmed

Mental health facility will have 25 beds, up from 20 in current facility

Convicted animal abuser to return to B.C. court May 21

Catherine Jessica Adams is facing a breach of probation charge

Gallery: Project Heavy Duty inspires students into it’s 32nd year

The event is a collaboration between SD91 and industry in and around Vanderhoof, Fraser Lake and Fort St. James

Telkwa pot plant application passes review

Cannabis company claims new Health Canada regulations are working in its favour

Madison Scott’s mother hosts event to keep search for her missing daughter alive

Eight years ago, the Vanderhoof teenager disappeared, and the RCMP continue to chase leads

Rescuers finally persuade Eiffel Tower climber to come down

The official said the man was ‘under control and out of danger’ on Monday night

LETTER: Fletcher ‘blurs reality’ on B.C. union public construction

Bridge, highway projects awarded to companies, not unions

Killer of Calgary mother, daughter gets no parole for 50 years

A jury found Edward Downey guilty last year in the deaths of Sara Baillie, 34, and five-year-old Taliyah Marsman

Terrace hospital’s business plan approved

Health Minister’s announcement opens door to construction phase

Federal government funds millions to help B.C. police spot drugged driving

Many police departments have expressed wariness about using the only government-approved roadside test

Judge: Mississippi 6-week abortion ban ‘smacks of defiance’

The new law would prohibit most abortions once a fetal heartbeat can be detected

Oil companies, 24-cent gap between B.C., Alberta to be focus of gas price probe

Premier John Horgan called the spike in gas prices ‘alarming’

Motorcycle deaths spike 50% since 2017

Riders were most likely fatally crash on the weekends compared with the rest of the week

Mother of accused charged in death of Surrey teen girl found in torched SUV

Manjit Kaur Deo charged with ‘accessory after the fact’ in 2017 death of Surrey teen

Most Read