Poor pay higher tax rate than rich in B.C.: study
Jon Woodward, ctvbc.ca
Published Tuesday, June 28, 2011 3:00PM PDT
Wealthy people in B.C. are paying a lower rate of provincial tax than the middle class and the poor when taxes like the HST are included in the calculation, according to a new study.
Middle and low-income people are paying a greater share of their income in taxes thanks to levies like provincial health premiums, carbon taxes on gasoline, property taxes and the harmonized sales tax, according to research from the Canadian Centre for Policy Alternatives.
"We've turned the tax system on its head," study co-author Seth Klein told CTV News.
"Most British Columbians expect that the wealthier you are, the more taxes you pay. In fact, in practice, what you have is the opposite. The wealthier you are, the lower your overall tax rate."
In 2010, the study found that higher earners pay a much lower rate of tax -- 11.2 per cent -- while middle-earners pay 12.8 per cent and the bottom earners pay the highest tax rate of all, at 14.1 per cent.
When reached at a press conference in Victoria, Premier Christy Clark said she was "concerned" about the report's implications.
"The middle class is getting squeezed," she said. "We have to be concerned about total costs on people."
Clark said that her government has reviewed recent rate increases from BC Ferries, BC Hydro and ICBC because they had to be mindful of the impact of user fees on taxpayers. The government is also campaigning to reduce the HST by two per cent if the tax survives a referendum.
"I am concerned about those things. That's why we're seeing those reviews. I want to ratchet back some of those costs," Clark said.
The CCPA, a left-leaning think tank, provided CTV News with an advance copy of the study, which is expected to be released on Tuesday.
Related: Read the full report online
Researchers obtained data from Statistics Canada that included actual income and tax paid for a large anonymous sample of B.C. taxpayers. The data showed how much each taxpayer paid in income tax, property tax, sales tax, and carbon tax.
The study's authors discovered that in 2000, the tax rate was close to flat in B.C: The top ten per cent of earners paid 14.8 per cent of their income in tax, middle earners paid 14.6 per cent and those near the bottom of the spectrum paid 14.3 per cent of their income in tax.
But the last decade has seen a lower tax burden for the rich and heavier one for the poor.
In the top one per cent of earners, the difference was especially marked, Klein said. In 2000, the top one per cent paid the highest tax rate at 16 per cent, but in 2010, they paid among the lowest, at 11.2 per cent.
Underlying the trend is a dramatic reduction in income taxes, which hit wealthy people the most, while fees that don't change with income, such as MSP premiums, have typically increased, said Klein.
"We're reducing your reliance on personal income tax, and that's what's driving the shift that we've seen," he said.
The study did factor in rebates and credits that low-income people receive, he said. He added that in terms of strict dollar amounts, wealthy people still paid more tax.
The study's findings conflict with B.C.'s estimates of how its taxes affect families. In its last fiscal plan, the government estimated that someone earning $25,000 would pay 11.1 per cent in total tax, while someone earning $80,000 would pay 24.9 per cent in total tax.
Finance Minister Kevin Falcon said he didn't put much stock in the study's numbers, and suggested his staff would find problems with the report.
"They keep coming out with these reports, and I rarely agree," said Falcon. "They want to go back to a system -- tax the rich. They're talking about the professionals that we're trying to attract to B.C., the doctors and the nurses. We want them to come to B.C. and we want them to stay. We don't want to chase them out with a tax system."