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

First Nations included in latest Columbia River Treaty talks

Seventh round of negotiations between Canada and U.S. wrap up in Washington D.C.

City of Revelstoke pays $6.66 million in wages in 2018

Top earner was former CAO Alan Chabot

UPDATE: Man presumed dead after boat capsizes south of Revelstoke

One Alberta man made it to shore and was rescued, the other is still missing

Acoustic show at The Last Drop this week

Live shows go Monday, Tuesday, Thursday and Friday at 6:30 p.m.

Making interesting beer and acting like it’s normal

Rumpus Beer Co. has been 9 years of dreaming and 15 months in the making

Air Canada reviewing how crew left sleeping passenger on parked plane

In a Facebook post, the woman said she woke up ‘all alone’ on a ‘cold dark’ aircraft

Four-year-old boy assaulted at B.C. soccer game

It happened at a weekend tournament in Ashcroft

AquaHacking Challenge comes to Okanagan to help address water issues

Between 2015 and 2018, the program has resulted in 12 active startups with 75 per cent still active

Mudslides expected to keep Shuswap road closed for at least three days

Alternate route Celista-Blueberry Forest Service Road, accessible by four-by-four vehicles

Memorials set up to honour Antarctica explorer

In 1913, two memorials in Summerland honoured Naval Officer Robert Scott

Multiple crashes slow traffic on Coquihalla south of Kamloops

Drivers are expected to be stuck for up to 90 minutes

Top B.C. court upholds ruling that struck down indefinite solitary confinement

Feds had appealed ruling in case brought by B.C. Civil Liberties Association, John Howard Society

Trial dates set for three men accused of 2017 killing near Hope

Lawyers for the accused appeared in Kelowna at B.C. Supreme Court on Monday

Biker airlifted from Okanagan mountain resort

22-year-old injured at SilverStar Mountain Resort

Most Read