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

Residents say Monday’s fatal crash in Saanich wasn’t unexpected

Speed has long been a concern for neighbours in the Cumberland and Union roads area

UVic hosts community gathering following death of two students

Campus community invited to reflect, support one another

Victoria police arrest man at gunpoint for allegedly assaulting two people with a knife

The man was arrested Monday night after in incident in the 900-block of Pandora Ave.

Judge quashes Victoria man’s appeal of 90 day weekend sentence for trafficking meth

Godofredo Narboneta Ruiz was the owner, driver of vehicle used to transport the drugs

Reynolds Secondary principal pens letter to parents after student involved in fatal crash

Various supports available to students, staff and community

WATCH: United Way #Drive4Five event launches campaign to raise $5 million

More than 80,000 lives changed last year by the United Way

Crime Stoppers most wanted for Greater Victoria for the week of September 17

Greater Victoria Crime Stoppers is seeking the public’s help in locating the… Continue reading

B.C. party bus company to be monitored after 40 intoxicated teens found onboard

Police received tip teens and young adults were drinking on party buses and limousines in Surrey

Rick Mercer calls out Conservative candidate in B.C. for fake meme

‘Not true. All fake. Please Stop,’ tweeted Rick Mercer in response

Bear killed in Kimberley after chasing girl, wreaking havoc on town

This particular brown-coloured bear has been the subject of many calls this summer; very food habituated, CO says

Vancouver Island man bikes through B.C. Interior for mental health, addiction awareness

Vancouver Island Resident Mat Fee is approaching the final phase of his cross-Canada bike journey to raise awareness about addiction recovery.

Boy overdosed on illicit anti-anxiety drug found on Kelowna classroom floor, RCMP say

Noah Mills, 8, ingested a pink powdery substance off his Kelowna classroom floor

BC SPCA investigating after three dogs found shot dead in Prince George ditch

The three adult dogs appeared to be well cared for before being found with gunshot wounds, BC SPCA says

Psychiatric assessment ordered for man accused in Salmon Arm church shooting

Lawyer tells court accused was diagnosed with psychosis hours after his arrest

Most Read