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

Maple Ridge and Pitt Meadows business women to pitch their products to the stars at this years Oscars

One will attend the Luxury Gifting Suites in Hollywood while the other will help stack the swag bags

Measles case confirmed within Fraser Health region

One case within Fraser Health is related to the outbreak in three Vancouver schools.

City starts safety improvements at Maple Ridge camp

Following on recent decision in Supreme Court

Fashion Fridays: Must have wardrobe basics

Kim XO, helps to keep you looking good on Fashion Fridays on the Black Press Media Network

National Energy Board approves Trans Mountain pipeline again

Next step includes cabinet voting on the controversial expansion

Skier dies at Revelstoke Mountain Resort

Cause of death for young man has not been released

R. Kelly charged with 10 counts of sexual abuse

R&B star has been accused of sexual misconduct involving women and underage girls for years

More sailings coming to 10 BC Ferries’ routes

Transportation Minister Claire Trevena said the sailings were originally cut in 2014

Cryptocurrency exchange CEO who suddenly died leaves Kelowna house in will

Gerald Cotten, holding the keys to money tied up in his virtual currency exchange, died in December.

Regulator’s report, coming today, unlikely to settle Trans Mountain pipeline battle

The Trans Mountain pipeline will remain a controversial topic both in the political ring and out

5 to start your day

Australian woman dies in avalanche at Whistler, two boys OK after falling through Coquitlam lake and more

Australian woman killed in avalanche at Whistler

The woman and her partner were reportedly rescued by ski patrol, but she did not survive

Most Read