Vancouver’s richest will have to pay more income tax as British Columbia seeks to quell outrage over its prohibitive cost of living.
The Canadian province will now tax income above C$220,000 ($166,000) at 20.5%, up from 16.8%, the government announced Tuesday as part of its budget. The measure is expected to boost British Columbia’s personal income tax revenue by nearly 7% in the next fiscal year after a projected 3% decline this year, according to budget documents.
“It’s my job to make sure that the benefits of B.C.’s strong economy are felt by everyone, not just the few at the top,” British Columbia Finance Minister Carole James said in Victoria. “Today we’re asking the people at the top, the highest 1% of individual income earners, to pay a little more.”
British Columbia Premier John Horgan has made affordability a central plank of his government since taking power in 2017. Research has shown Vancouver — Canada’s priciest housing market — to be one of the continent’s most unaffordable housing markets with San Francisco-like home prices on Omaha-level incomes. In previous years, the provincial government’s measures have included levies targeting foreign buyers, properties left vacant for more than half the year, and a so-called school tax on luxury homes.
In Tuesday’s budget announcement, the government forecast its surplus would widen to C$227 million in the fiscal year beginning April 1, following a projected C$203 million surplus in the year ending March 31. It projects a C$179 million surplus in 2021-2022 and another C$374 million surplus in 2022-23.
British Columbia is expected to remain one of Canada’s fastest-growing provinces, the government said. The fiscal plan pegged economic growth at 2% this year, following a 1.8% expansion in 2019.
“We all want to feel the benefits that come with a strong provincial economy,” James said. “We all want life to be more affordable.”
The new tax bracket will mostly affect men: some 70% of those set to pay the new top rate are male, the government said. Meanwhile, a rise in the minimum wage to more than C$15 an hour by 2021 will disproportionately benefit women, James said. More than half of the province’s 140,000 minimum-wage earners are female, she said.
More broadly, however, budget documents show overall wage growth slowing: average weekly wages in B.C. rose 2.5% last year, down from a 4.1% increase in 2018. The projections also indicate wage growth slowing this year and next.
Meanwhile, the government’s efforts to drive down property prices have been only moderately successful. The average sale price of a home in British Columbia fell in 2019 by 1.6%, according to budget documents, while housing activity is in an upward trajectory after bottoming out last year, according to TD Economics.
Asked if she wants to see sharper declines, James answered, “I do.”
This article was provided by Bloomberg News.
