Higher taxes, less competitive economy potentially on the way for British Columbia
Amid all the speculation about politics and who will form a government in B.C., it’s easy to lose sight of the real impact of policy changes awaiting British Columbians.
Take tax policy, for example, which will directly hit the pocketbooks of British Columbians and have significant ramifications for B.C.’s economy.
If an NDP-Green government is formed, average B.C. families would be forced to pay higher taxes and the province would become a much less-attractive place to invest, work and engage in entrepreneurial activities.
Consider the tax increases listed in the NDP-Green power-sharing agreement and those common to both parties’ election platforms. These include higher carbon, personal income and business taxes. Specifically, the agreement calls for a 67 per cent increase in B.C.’s carbon tax from $30 per tonne to $50 per tonne by 2022, and commits to expanding the types of activities covered by the carbon tax.
Both parties also want to raise personal income tax rates. The NDP wants to increase the personal income tax rate on British Columbians earning more than $150,000 to 16.8 per cent from 14.7 per cent while the Greens want to increase the share of personal income taxes paid by those earning more than $108,460 by three per cent.
And both parties want to raise the general business tax rate from 11 to 12 per cent.
What do these tax hikes mean for average British Columbians?
Once fully implemented, they would add a further $1.4 billion a year to the tax burden of British Columbians. That works out to $594 more in taxes for the average British Columbian family led mainly by a $482 increase in fuel and carbon taxes.
Crucially, even though the NDP-Green agreement proposes that a portion of the increased tax revenue be used to fund carbon tax rebates, the details of the rebate have not been specified. However, even a doubling of B.C.’s existing Climate Action Tax Credit (paid quarterly with the federal GST credit) would not protect average families since the credit is fully phased out for families with incomes above $54,000.
While it’s possible, perhaps even likely, that the rebates will protect low-income groups, families with incomes ranging from $50,000 to $100,000 will pay nearly $400 more in taxes while those with incomes at the upper end ($150,000 to $250,000) will pay more than $1,000 in higher taxes.
Unfortunately, these increases across the income spectrum including, again, a nearly $600 annual hit to the wallets of average British Columbian families, is not the only pending damage. Higher carbon, personal income and business taxes will also make the province less-attractive for business investment and entrepreneurs.
And make it more difficult to attract and retain top talent including entrepreneurs and business professionals, harder to attract businesses, and will particularly penalize our energy intensive industries.
The end result is less investment, lower rates of job-creation, and fewer opportunities for British Columbians to prosper.
Finally, given the spending initiatives outlined in the NDP-Green agreement and the billions of dollars of un-costed promises in the NDP election platform, an NDP government, propped-up by the Green Party, would almost certainly institute even higher taxes beyond those listed above and/or run annual budget deficits, which is simply taxation deferred into the future.
Policy choices have consequences. If an NDP-Green government is formed, average B.C. families will face a higher tax bill and less-competitive economy.
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