Think City Presentation – December 1, 2009-12-01
By Ian Mass
One problem in this debate is that the term "Fair Taxes’ has now reached the same status as Vancouver needing to be world class.
When people hear world class attached to an issue, we have an immediate reaction – 1. it must be true because we have heard it so many times 2. let’s fix it. So if we are accused of not being world class, then it seems to be automatically ok to spend $458M on a new roof for BC Place and other foolish things. The problem is that the solution never satisfies the need so we go further into the insatiable appetite of finding solutions to problems that never solve the problem.
The second issue is being heard in this debate. When a representative of COPE questions how the tax system works we’re dismissed as being anti business. Shuts down our perspective pretty quick. But I for one have a big stake in this debate beyond the house I live in. I run a non profit business in Vancouver that pays $137,000 in business taxes per year over 14 different locations. A tax shift is money in or out of my business pocket. So maybe with a little more credibility let’s have a look at what we’ve done so far to try to get to this so called fair tax system.
First we became convinced that business was being treated unfairly so we had to fix that.
I wish I was Ivan Coyote or Bud Osborne and could make these figures into a story or a poem, but I’ll just give them to you straight up, statistics and all.
The B.C. Government has cut small business taxes from 4.5 to 2.5 per cent – a 44 per cent reduction – for an estimated total savings of $401 million for small business over three years. This is the second lowest rate in Canada. The Province will reduce the small business corporate income tax rate from 2.5 to zero by April 1, 2012 obviously making it the lowest rate in Canada.
The small business tax threshold was increased from $200,000 to $500,000. Eligible small businesses pay this rate on the first $500,000 in income. When the rate goes to 0, small business will end up paying nothing on income of $500,000 or less.
Corporate tax reductions planned for the next three years will give B.C. a combined federal-provincial rate of 25 per cent, among the lowest corporate income tax rates of the world’s major industrialized economies, 10 points lower than the U.S. federal rate by 2012.
B.C.’s corporate income tax rate is 11 per cent, the second-lowest tax rate in the country, with further reductions planned to 10 per cent by 2011. Since 2001, the general corporate income tax rate has been reduced by 33 per cent.
B.C. eliminated the corporation capital tax on non-financial corporations, and the tax will be phased out for financial institutions by 2010.
Federal corporate tax cuts just in this coming year will be $1.5B
Mother of all fair taxes the HST will save BC businesses 2 to $3 billion dollars as the costs are shifted to consumers
What have we achieved with these so called fair taxes?
Most of the gains of economic growth have gone to the richest 10%. Earnings for those in the middle have been stagnant for 30 long years, and workers at the bottom are losing ground compared to a generation ago. In after-tax terms the gap is at a 30-year high.
BC’s minimum wage has not been raised for eight years and is the lowest rate in Canada
Post secondary students will be paying more in tuition in 2011 ($1.11B) than corporations pay in taxes ($1.04B) with student debt at an all time high
BC has the highest child poverty rates in Canada for the 6th straight year
Only four in 10 men and three in 10 women are eligible for EI benefits (8 of 10 in 1990)
On and on, homelessness, youth unemployment rate, highest housing costs in Canada.
Thing is we can’t just say you win, stop now. It keeps piling on. Now it’s the tax shift in Vancouver. After while my bullshit meter just goes into overdrive.
There is no case for and certainly no need for another tax shift from business to consumers.
We need to share this burden as we look for ways to spread the responsibility fairly, save services and save jobs. COPE does not support the shift and in fact believes that with a combination of additional savings (i.e. Managers positions being cut rather than just front line, stop forgiving parking ticket revenue, VANOC and province compensating city for lost revenue, city selling the approximate $200,000 in Olympic tickets etc.) and a slight increase above 2% (.5 to 1%) is justified. There is nothing sacred about 2%, it was number picked out of the air and one that can be and should be adjusted now that we see the impact of that scenario.
There you have it – we’re COPE – we oppose the tax shift and we’re the only ones.