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Thoughts about the relationships between transport and the urban area it serves

Archive for January 16th, 2013

BC’s Regressive Tax Shift

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This post is not about a new report. In fact the data comes from something published in June 2011. It was drawn to my attention by a Green Party of BC tweet. So it is timely in the sense that the BC Liberal government is using your money to buy air time for adverts that tell you how well off you are thanks to their taxation policies. And what they say is a Lie. Since the BC Liberals came to power what had been a slightly progressive taxation system has become regressive. Poor people in BC pay more tax than rich people.

The Report is subtitled “A Decade of Diminishing Tax Fairness, 2000 to 2010” and is available as pdf from The Canadian Centre for Policy Alternatives. It was written by Marc Lee, Iglika Ivanova and Seth Klein.

This report examines changes to the provincial tax system over the last decade.
We look at the total provincial tax rate for households at different income levels
(the actual tax bill as a share of household income for all personal provincial taxes
combined—income, sales, carbon and property taxes, and MSP premiums).

We find that together these changes have created a tax system where the rich now
pay a lower total provincial tax rate than the rest of us.
• In 2000, most BC households paid about the same total tax rate, with
households in the top 10% and top 1% paying a little more.
• By 2010, however, the tax system had become regressive, with the richest
20% of households paying a lower total tax rate than the rest of us.

This regressive tax shift was driven by the following:
• Large income tax cuts primarily benefited upper-income earners, both in
dollar terms and as a share of income.
• Combined, tax cuts delivered an average of over $9,200 per year to the
richest 10% of BC households, and more than $41,000 to the top 1%. In
contrast, lower income households received an average tax cut of $200 per
year, and those in middle got just over $1,200.

• Between 2000 and 2010, the share of provincial government revenues coming from personal income taxes dropped by nearly one third.
• The province now collects more revenues from sales taxes (28% of revenues) than from personal income taxes (27% of revenues).
• BC families now contribute more in MSP premiums than businesses contribute in corporate income taxes.

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This morning the Premier held a press conference where she defended the government ads as means of building consumer confidence in the economy against BC NDP cynicism (according to Ian A Bailey of the Globe and Mail).

I know that I have been accused of cynicism more than once, but in the face of the current pre-election propaganda assault – which we are paying for – I cannot think of a more appropriate response. Except mine is not NDP cynicism.

MSP premiums went up again this month. At one time those were paid by the BC Government to those of us who drew Public Service (and teachers’) Pensions. No longer. We also have to pay for the Blue Cross premiums: the so called “Fair Pharmacare” programme does not actually pay out anything at all for the four figure annual prescription cost I have to pick up  that neither Blue Cross nor the public sector covers. The same government of course sent me a letter reassuring me that the value of my pension had not been reduced. They were just not letting me keep as much of it but were clawing it back through fees. And the sort legal gymnastics that the healthcare insurance industry has perfected in the US to avoid paying out much of the claims made against policies they write.

So no I do not have more disposable income, which as far as I know is about the only thing that “promotes consumer confidence”. I suppose she means that it is necessary to get more consumer spending going to increase the size of the economy . But the only way that can now happen, given the most of us now have less in our pockets, is that we borrow more to boost our consumption. I cannot see that has helped to build a sustainable economy – and was a contributing factor to the 2008 crash. It also seems to me that the increased reliance on sales taxes must have had some influence on the growth of cross-border shopping which has been so helpful to Whatcom County.

On the whole the idea that the BC Liberals are a party that can be trusted to run the economy properly does not seem to have been borne out by experience. Yet they will still have a very significant number of people who will vote for them. Hopefully, not enough to get them re-elected.


Written by Stephen Rees

January 16, 2013 at 2:33 pm

Posted in Economics, politics

Tagged with ,