Premier Christy Clark listens as Finance Minister Mike de Jong delivers his third budget speech in the B.C. legislature

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

 

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Victoria police are asking for help locating Izabel Villeneuve, 14, who was last seen Jan. 19. (Courtesy of Victoria Police Department)
Victoria police seek help locating missing 14-year-old

Izabel Villeneuve was last seen in the morning of Jan. 19

Provincial health officer Dr. Bonnie Henry updates B.C.’s COVID-19 situation at the legislature, Jan. 11, 2021. (B.C. government)
Vancouver Island smashes COVID-19 high: 47 new cases in a day

Blowing past previous records, Vancouver Island is not matching B.C.s downward trend

The cost of potentially counting deer regionwide was among the issues that prompted Capital Regional District committee members to vote against pursuing a greater CRD role in deer management. (Black Press Media file photo)
Expanded deer management a non-starter for Greater Victoria

Capital Regional District committee maintains current level of support

Environment Canada is forecasting snow for the east Vancouver Island region the weekend of Jan. 23. (Black Press file)
Up to 15 cm of snow forecast for Vancouver Island this weekend

Snow on Malahat to begin Saturday night, according to Environment Canada

The Boys and Girls Club of Greater Victoria says sale of the planned subdivision will increase the club’s ability to provide services and support. (Courtesy of Association for the Protection of Rural Metchosin)
Victoria Boys and Girls Club says youth would benefit from Metchosin land sale

Club says sale will guarantee supports and programs at time when demand high

Businesses continue to struggle under COVID-19 restrictions as the pandemic reaches the one-year mark. (B.C. government)
Another 564 COVID-19 cases, mass vaccine plan coming Friday

15 more deaths, community cluster declared in Williams Lake

Anyone with information on any of these individuals is asked to call 1-800-222-TIPS (8477) or visit the website victoriacrimestoppers.ca for more information.
Greater Victoria Crime Stoppers wanted list for the week of Jan. 19

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

A specialized RCMP team is investigating a suspicious trailer, which might have connections to the illicit drug trade, found abandoned outside a Cache Creek motel. (Photo credit: <em>Journal</em> files)
Police probe U-Haul trailer linked to illicit drugs left outside Cache Creek motel

Hazardous materials found inside believed to be consistent with the production of illicit drugs

Premier John Horgan leaves the podium following his first press conference of the year as he comments on various questions from the media in the Press Gallery at B.C. Legislature in Victoria, B.C., on Monday, January 13, 2020. THE CANADIAN PRESS/Chad Hipolito
Interprovincial travel restrictions a no-go, Horgan says after reviewing legal options

The B.C. NDP government sought legal advice as concerns of travel continue

Gem Lake Top, at Big White Ski Resort, seen at Jan. 8. (Big White Ski Resort)
Big White cancels $7.3M in lift tickets, accommodations due to COVID-19 orders

Since November, the ski resort has been forced to make several changes

Darlene Curylo scratched a $3M ticket, BCLC’s largest ever scratch and win prize. (BCLC)
Kelowna woman in shock after winning BCLC’s largest-ever instant-ticket prize

Darlene Curylo couldn’t believe her eyes when she saw the amount of money she’d won from a scratch ticket

While each person has different reasons for becoming homeless, a UBCO study shows they learn through their interactions with different services to perform ‘as homeless’ based on the expectations of service providers. (Contributed)
Kelowna homeless forced to ‘perform’ for resources, says UBCO study

One participant in the study said ‘It is about looking homeless, but not too homeless’

Aquaculture employee from Vancouver Island, Michelle, poses with a comment that she received on social media. Facebook group Women in Canadian Salmon Farming started an online campaign #enoughisenough to highlight the harassment they were facing online after debates about Discovery Islands fish farms intensified on social media. (Submitted photo)
Female aquaculture employees report online bullying, say divisive debate has turned sexist

Vancouver Island’s female aquaculture employees start #enoughisenough to address misogynistic comments aimed at them

Most Read