CCPA updates BC tax cut distribution, looks at how costs are being shifted to individuals and families

April 21, 2005

(Vancouver) The Canadian Centre for Policy Alternatives has updated its analysis of who got how much from BC’s income tax cuts, and how tax increases and new costs for services are impacting different individuals and families. The analysis shows that the lion’s share of tax cuts — even after incorporating those announced in the latest provincial budget — went to higher income earners. And while everyone has taken on additional costs, the larger a person’s income, the more likely they are to have money left over.

In February, the provincial government tabled a budget with $484 million in tax cuts. However, the majority of this, about $270 million, merely represented a reversal of the government’s sales tax increase (made in 2002). The other measure was a targeted low-income tax cut worth $120 million. “While welcome to British Columbians with lower incomes, this tax cut is of minimal benefit, and must be assessed in a larger context,” says Stuart Murray, the CCPA–BC’s Public Interest Researcher, and author of Shifting Costs: An Update on How Tax and Spending Cuts Impact British Columbians.

“The tax cut pie is still very unevenly sliced,” says Murray, pointing out that even after accounting for the 2005 tax cut, the 0.4 per cent of the population earning more than $250,000 per year receives 15.2 per cent of total tax cut dollars. In contrast, the 60.8 per cent of people earning less than $30,000 per year receive only 17.2 per cent of the pie. “While the 2005 tax cut does mean some additional savings for low-income earners, the overall effect of the tax cuts is regressive.”

Shifting Costs also looks at how tax increases (such as higher MSP premiums) and new out-of-pocket costs for services (such as de-listed health services like physiotherapy, and higher tuition fees and Pharmacare deductibles) stack up against the dollars from tax cuts. It provides a “bottom line” analysis for nine different individual and family profiles at various income levels.

“Overall, those with higher incomes and fewer needs have benefited most from the government’s policies,” says Murray. “Public services should be viewed as a form of insurance against hardship. As the government makes cuts to public services, we are exposed to more risk and out-of-pocket costs. This approach can work for those who can afford to pay their way, but even wealthier British Columbians may not feel that the tax cuts were worth the price being paid by society at-large.”


To arrange an interview, call Avi Goldberg at 604-801-5121 ext. 229.