Lower Mainland gets skewed share of income tax cut

Study shows provincial tax and spending cuts are increasing gap between Lower Mainland and BC’s other regions
January 21, 2003

(Vancouver) A new study from the Canadian Centre for Policy Alternatives shows that BC’s income tax cuts concentrated dollars in Greater Vancouver, already the wealthiest part of the province, while smaller communities are being hit hardest by the spending cuts.

Bleeding the Hinterland: A regional analysis of BC’s tax and spending cuts examines how the recent provincial tax and spending cuts have affected BC’s “two economies”: the Lower Mainland and the “Hinterland.” The study includes original analysis showing that only 29% of BC’s personal income tax cut went outside the Lower Mainland and Victoria, even though this area accounts for 34% of taxpayers. The GVRD received 58% of the tax cut, compared to its 51% share of the population. Inequalities at the municipal level are more stark—West Vancouver had an average tax cut of $2,085 per taxpayer, the highest in BC and three times larger than the average tax cut for the province as a whole.

The smallest average tax cuts were in the Okanagan, with Keremeos at an average of $335 per taxpayer, followed by Oliver at $391 and Osoyoos at $397. The report provides a comprehensive breakdown of the total and average tax cut received by region and municipality for the entire province (see sample on next page). It is available on-line, along with the full study, at www.policyalternatives.ca.

The study’s author, CCPA economist Marc Lee, says communities outside the Lower Mainland are getting the short end of the stick. “To the limited extent that tax cuts have stimulated the economy, they’ve done so more in the Lower Mainland than outside it,” says Lee. “But spending cuts have disproportionately hurt smaller communities, as services have been cut, lost altogether or centralized in regional hubs.”

“In the wake of the Softwood Lumber Dispute and a global economic slowdown, BC needs a comprehensive economic development strategy that focuses on the needs of resource dependent communities. Tax cuts, spending cuts and the Olympics aren’t up to the task.” Lee says he hopes the government will use the coming provincial budget as an opportunity to begin tackling the growing gap between the Lower Mainland and BC’s resource and rural communities.