B.C. could raise as much as $2.3 billion in new revenue, pay off its deficit, and fund new programs if it brought provincial taxes in line with the Canadian average, according to a controversial report by a left-leaning think tank.
The report, by the Canadian Centre for Policy Alternatives, provides insight into the effect of some of the NDP opposition’s policy proposals, but also goes further in its call for higher government levies.
“One way or another we have to increase revenues,” said report co-author Seth Klein. “When you look at our budget crunch and our lack of services such as child care, we realize we have to get serious about the major challenges of our time, and that’s going to take money.”
The report, called “Progressive Tax Options for BC,” counts projected revenue for different tax scenarios. Increasing income taxes by a percentage point in each bracket, and adding two new brackets on income above $150,000 and $200,000 a year could bring in $2.3 billion in revenue, it says.
Adding two new tax brackets on higher income earners could bring in $700 million a year, while a corporate tax hike to 13.5% would also bring in $700 million, the report says.
Those increases would go a long way cover B.C.’s $1.5 billion deficit, and also go towards funding new social housing and reduce class sizes, the report claims.
While many of the scenarios proposed in the report target higher income earners or corporate taxes, the measures that brought in the most new revenue – the $2.3 billion proposal that the CCPA says brings B.C. taxes to the Canadian average -- would result in a $200 to $800 annual extra bill for middle-class taxpayers.
“We’re not trying to raise money and send it into a black hole,” Klein said. “We’re trying to raise money to take the pressure of other areas. If everyone paid a bit more, we could afford to implement a child care plan. For a lot of young families, child care is the second most expensive item in their budgets after rent,” he said.
RELATED: Read the entire CCPA report here
NDP leader Adrian Dix has mused about raising the corporate tax rate, and told reporters in December that while those making under $150,000 would not face a tax increase, the party had not decided on increases above that level.
“On the first $150,000 of income, we’re not going to see income tax changes,” Dix said then. “We’re looking at whether we require, because of the financial state the Liberals are leaving the province in – some action at that level. We haven’t landed on that question yet.”
Jock Finlayson of the B.C. Business Council said he doubted the income promised by these proposals would materialize as higher income earners took their wealth outside the province.
“Unlike the CCPA I don’t see we have a low tax burden in B.C.,” he said, pointing to cross-border shopping as an example of people spending money outside of a jurisdiction to escape higher costs. “We have to be conscious of our competitive reality.”
“I’m not saying there’s no room but I think the basic narrative, that taxes are too low and government too small, is not convincing,” he said.
Finlayson said he hoped that extra government revenue would come from similar taxes on economic growth.
