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

Peanut Butter Campaign supports local food banks

Both Save On Foods in Fernie and Overwaitea in Sparwood participated in… Continue reading

VIDEO: Explorers uncover Canada’s deepest cave in Fernie

The cave, named Bisaro Anima, was confirmed to have broken the record on New Year’s Day

New Glade ferry enters testing phase

The Glade II will be able to carry heavier loads and will emit less greenhouse gases.

Freezing rain warning in effect for B.C. Southern Interior

Environment Canada issued the freezing rain warning for most of the Southern Interior Tuesday morning

Rumble In The Rockies brings live boxing back to Fernie

Local boxer, Dylan Mitchell takes first career win at home

B.C. cougar kitten rescued after mother struck by vehicle

Conservation Officers find home for young kitten found dehydrated and frostbitten near Williams Lake

Ministry statistics show a gap in SD5 teachers’ wages

On average, male teachers in SD#5 earn $5,675 more annually than their… Continue reading

Suspected Toronto serial killer targeting gay community arrested

A 66-year-old man is charged with first-degree murder in disappearance of two Toronto men

Carpet bowlers have been excluded from BC 55+ Games and Canada 55+ Games

Gold medal carpet bowling winners not able to defend their titles in 2018

UPDATE: Police release new footage, launch website in hunt for 13-year-old’s killer

IHIT say no one has been arrested or charged in connection with Marrisa Shen’s death

Rural B.C. students score visit with Canadiens netminder Carey Price

Two students from the Chilcotin can hardly wait to meet hometown hero Carey Price in Montreal.

VIDEO: Elk parade on Vancouver Island is awesome sight

They’re out in force for a morning stroll. Check out some of Youbou’s famous elk.

North Delta’s boy newest BC Children’s Hospital Foundation’s Champion Child

Colton takes the reins from 2107 Champion Child and Tsawwassen resident Taylin McGill

VIDEO: B.C. announces anti-racism funding for prevention, education

Ravi Kahlon said money will go to B.C. Organizing Against Racism and Hate (OARH) program

Most Read