B.C. Election: Tax promises by NDP and Conservatives won’t move needle on deficit, say experts

B.C.’s two main political parties are trying to win over voters in this month’s election with promises of tax cuts in the case of the Conservatives and the targeting of wealthy residents in the case of the NDP.

But some experts say that nothing either party has proposed so far will do much to fix the province’s projected $13.8 billion deficit.

Economists say B.C. is in for some tough times if nothing is done to lower the cost of government, while business groups want government to ease the cost of operating in B.C.

NDP Leader David Eby has taken a classic left-wing approach to affordability by targeting wealthy British Columbians and saying they need to pay their fair share, says David Black, a Royal Roads political communications professor.

Eby announced Sunday that he would be raising the marginal tax rate on the top two tax brackets by two points if re-elected, with British Columbians taxed at a rate of 18.8 per cent on every dollar earned between $190,405 and $265,545. Residents would also be taxed at a rate of 22.5 per cent on every dollar earned between $265,545 and $1 million and 24.5 per cent on every dollar made over $1 million.

Eby estimates the changes to the tax code would bring an extra $1 billion to the provincial government annually.

It follows a previous NDP promise to extend the vacancy and speculation tax to empty condos unsold for over a year, starting at two per cent of assessed value and increasing by one point every year it remains unsold. Eby also promised to raise the tax to two per cent for all domestic property holders with empty units and five per cent for foreign owners.

On the other side of the ledger, the NDP have promised to remove the 10 cent fuel tax and paused the expansion of the PST to professional services.

SFU economist David Freeman says many wealthy British Columbians would find ways to shelter their income and that the total amount generated by the province annually through the tax changes could be only about $500 million.

“This massive increase on income tax on top earners, this will make us one of the highest tax jurisdictions in the world on top earners. Even if we do that, it barely puts a dent in the massive deficit the NDP are running,” said Freeman.

When accounting for the $672 million the province would forgo over a year because of the NDP’s promise to pause the 10 cent a litre fuel tax, Freeman said the NDP promises would leave the government with less revenue.

Marc Lee, an economist with the Canadian Centre for Policy Alternatives, is more optimistic, saying the NDP policies represent a “tax shift” that will allow lower-income British Columbians to pay less, while getting wealthier residents to pay more.

“For households with income up to $150,000 to $160,000, you’re definitely better off in B.C. compared to any other province, including Alberta,” said Lee.