Photo: B.C. Finance Minister Carole James delivers the 2020 Budget on Tuesday, February 18, 2020. Government of B.C.
A new tax on top incomes was among the highlights of B.C.’s 2020-21 budget, unveiled this week.
The province is raising the marginal tax rate from 16.8% to 20.5% for individuals earning more than $220,000 a year. The tax is expected to generate at least $200 million a year, with nearly half the revenue from the increase coming from individuals with incomes over $1 million.
B.C. Finance Minister Carole James told media “we've asked the top one per cent to pay a little bit more. We believe they've benefited from a strong economy, and we believe they can contribute a little bit more.”
The tax hike on the rich comes after the NDP government eliminated BC’s Medical Services Plan premiums, a regressive fee that cost B.C. residents up to $900 annually. It also increased corporate taxes for larger businesses and a speculation and vacancy tax on empty homes in 2018.
While the opposition and business lobbyists have criticized the government’s progressive tax measures for being “uncompetitive,” B.C. has had the strongest economic growth and lowest unemployment rate of all provinces for the past two years and is expected to remain the top provincial economic performer this year and next.
Mounting evidence also indicates lower tax rates --especially for corporations and the rich-- no longer result in the growth and investment they initially promised.
In fact, experts such as the International Monetary Fund have recently urged governments to raise taxes on the wealthy in order to help the economy, address rising inequality and combat climate change.
It’s encouraging that B.C. is taking steps to make its tax system fairer while investing in benefits and public services, which have a more stimulative impact on employment and economic well-being. Other provinces should follow suit.