Friday, October 4, 2024

BC now has the 9th highest personal income tax in all of North America

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As of 2019, BC has the 9th highest personal income tax rate in all 61 American states and Canadian provinces, according to a report released by the Fraser Institute today.

BC’s combined federal and provincial personal income tax rate (PIT), which measures at 49.8%, is so high that it could start discouraging investors from coming to BC, says the Canadian think-tank.

“The B.C. government has recently made worse the province’s longstanding tax competitiveness problem with recent hikes to personal and corporate income taxes, payroll taxes, carbon taxes, vehicle taxes and property taxes—all of which make it harder to attract potential skilled-workers, investors and businesses,” said Ben Eisen, co-author of the Fraser Institute report, Assessing British Columbia’s Tax Competitiveness, in a release.

The province’s combined personal income tax rate of 49.8% kicks in at incomes of $150,000, and is 13% higher than nearby American neighbours in Washington and Alaska, where the tax rate is 37%.

Meanwhile, BC sits at number 1 for highest tax rates on business investments anywhere in Canada. The Fraser Institute says that when looking at the ratio of business investment per worker, BC falls below the national average.

“B.C.’s tax regime is simply uncompetitive with not only neighbouring U.S. states, but also several Canadian provinces,” said Eisen.

“This is a major policy problem that the government in Victoria should be trying to address—instead it has taken steps that have made matters worse.”

To remain competitive

When looking at the data that the report collected, the Fraser Institute believes changes must be made to BC’s tax system to encourage more investors to come to the province.

The report found that while BC’s corporate income tax rate is relatively average for Canada, our province’s unique sales tax system puts pressure on a wider range of business costs, placing BC’s marginal effective tax rate (METR) above the rest of the country’s.

(Graph / Fraser Institute)

The institute reports that the real GDP of the average British Columbian is below the Canadian average, and BC ranks 54th out of all 61 regions in North America for economic output per worker.

The report also found that BC consistently fell below the national average for business investment per worker since the early 1980s, and that the gap has only widened.

“Higher levels of investment and productivity are critical if policymakers hope to improve the living standards of British Columbians,” concludes the report. “Yet recent increases in taxes, coupled with long-standing high tax rates on new investment, mean that the province may well be in store for relatively lower levels of economic prosperity.”

“The combination of higher taxes in BC and lower taxes elsewhere could lead to less investment, slower productivity growth, and a lower level of overall economic growth in the province.”

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Adam Chan
Former Staff Writer at Victoria Buzz.

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