Quite right. BC Liberals have slowly shifted away from progressive taxation, preferring revenues from fees and taxes that have greater impact on the lower and middle classes. For example, the provincial tax on clear gasoline is 32.17¢ a litre. To a person earning $200,000, average fuel consumption would result in a tax of 0.5% of income. To a person earning $50,000, the same amount of fuel tax is 2.0% of income.
If that were the only regressive tax element, we might not have concern. Of course, it is not. Here is one example. If you are one of the fortunate few with employer paid extended health, vision and dental care, you are less burdened than others. Employer contributions for those are tax-free but uninsured individuals pay for the services with after-tax dollars. For example, if you face a $5,000 orthodontia bill and have a marginal tax rate of 30%, you must earn $7,150 to pay the dentist bill. The uninsured tend to be the retired and the people working in small business and on the margins of the economy.
Consumption taxes on necessities are not progressive and even if one begins at a small rate, it may not stay small and will become destructive to people who can least afford it. This year in BC, the richest taxpayers are relieved of about a quarter billion dollars in income tax, which is about the amount to be raised in the first year of the transit sales tax, if TransLink numbers are incautiously believed.
Additionally, the province is allowing natural gas producers over $600 million in credits to subsidize production costs, while it annually spends over $400 million more to promote the gas industry and aims to spend $8-10 billion so Site C can provide underpriced power to mining and gas companies. (The promotion the industries really wants is relief from paying the actual cost of electricity used, relief from assessment of royalties and taxes, waivers of environmental rules and employment standards and the right to import foreign workers.) In the meantime, we close plants that once added value to forest products and ship raw logs overseas and BC Hydro sells electricity to other industries for less that what equivalent energy costs, without calculating the number of jobs that result, if any. Residential consumers are asked to make up the difference.
A taxation system is much more than a way of raising money for essential public services. It can be a means to address inequality and promote a healthier economy. Alternatively, it can be a way to enrich influential insiders and their pals. The Liberal Government chose the latter path and it has had remarkable success. You won’t find a label on the door, but the most powerful segment of British Columbia’s government is the ministry of graft and corruption.
When transit tax proponents argue that its imposition is the only way to improve transportation services, they are wrong and they know it. As is apparent from my earlier scribbling, I believe the first action should be to clear out Translink’s self-serving Board of Directors and any part of senior management not willing to maximize efficiencies and economies. The Board should not be a resting place for patronage appointees who only come close to transit vehicles when they drive past them on the street. Management must commit to zero-base budgets and to full transparency and detailed, timely reporting of financial information. The veils of secrecy must be torn down so diligent reporters like Bob Mackin can let in the sunshine.
Translink must eject the self-interested consultants who’ve taken control and they must engage transit users in decision making, without filtering by consultants. Independent experts, conducting peer-reviewed work, should examine transit plans for effectiveness and determine that goals being addressed are the right goals. All of this could be done in a few months. Then, there could be an open discussion about how best to fund the objectives, including the capture of value created by new transportation infrastructure.
Once TransLink has set a new course, then we will move forward. Without change, we dig a deeper hole and the people who benefit most are the ones selling us shovels.