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Canwest News Service
When we talk about the Vancouver city budget, we're presented with an argument about so-called "fair taxes" The term, "fair taxes", is loaded with the assumptions that 1) business taxes are unfair and 2) we must do something about it.
Vision Vancouver proposes to shift two per cent of taxes away from business and onto residents, resulting in businesses having no increase and residents paying a four-per-cent more. Like other Vancouverites, we at the Coalition of Progressive Electors all have a stake in this issue beyond the tax we pay on the houses where we live — we all engage with for-profit and nonprofit business as workers, managers, consumers, etc. So, in this difficult economic climate, we must balance the way we look at taxes.
What explanation is given for the plan to shift taxes from businesses to residents? We are told that business is being taxed unfairly. But the B.C. government has cut small business taxes by 44 per cent from 4.5 per cent to 2.5 per cent, an estimated total savings of $401 million for small business over three years, the second lowest rate in Canada. The province will reduce the small business corporate income tax rate from 2.5 per cent to zero by April 1, 2012.
The small business tax threshold was also increased from $200,000 to $500,000. When the rate goes to zero, small business will end up paying nothing on income of $500,000 or less.
We could do even more for small business. Earlier this year, COPE suggested that we create a differentiated tax bracket for small business at the municipal level, so we can treat a mom and pop store differently from Wal-Mart. No response from the province yet on the request.
When we look at corporate taxes, reductions planned for the next three years will give B.C. a combined federal-provincial rate of 25 per cent, among the lowest corporate income tax rates of the world's major industrialized economies and lower than in the U.S.
B.C.'s corporate income tax rate is 11 per cent, the second lowest tax rate in the country, with further reductions planned. Since 2001, the general corporate income tax rate has been reduced by 33 per cent. Finally, the mother of all so-called "fair taxes", the HST, will save B.C. businesses $2 billion to $3 billion dollars as the costs are shifted to consumers.
What have we achieved with these so-called "fair taxes?"
Most of the economic gains have gone to the richest 10 per cent. Earnings for those in the middle have been stagnant for 30 years, and workers at the bottom are making less than a generation ago. In after-tax terms, the gap is at a 30-year high. B.C.'s minimum wage has not been raised for eight years and is the lowest in Canada.
Post-secondary students will be paying more in tuition in 2011 ($1.11 billion) than corporations pay in taxes ($1.04 billion) with student debt at an all time high. B.C. has the highest child poverty rates in Canada for the sixth straight year.
Add to that, the appalling rates of homelessness and youth unemployment, the highest housing costs in the country, etc. etc.
And, now, under the guise of so-called "fair taxes," we see the tax shift in Vancouver from businesses to residents.
We need to look for ways to spread our costs and responsibilities fairly, save services and save jobs. COPE has never supported the tax shift — first introduced by the NPA — and we believe that the budget shortfall can be eliminated with a combination of these additional savings: – Put a true freeze on hiring. This means freezing management positions as well as city worker positions. – End the practice of "forgiving" parking tickets. – Demand that Vanoc cover the losses in parking revenue from street closures during the Olympics. – Sell the $185,000 worth of Olympic tickets the city purchased. – Ensure the province pays the Olympic costs they already committed to covering.
Most importantly, we need to cancel the tax shift of two per cent from businesses to residents. Is it "fair" for businesses to pay zero when residents pay four per cent more?
COPE would require all businesses and residents to pay equal amounts — about three per cent each. In combination with our proposed tax savings, this would save at least $10 million worth of services — and could save the Bloedel Conservatory and Stanley Park farm.
COPE Councillor Ellen Woodsworth will bring an amendment to council on Friday to cancel the tax shift.
During these difficult economic times, we all need to shoulder some of the burden.
It's time to work for truly fair taxes in our city. Making Vancouver great means ensuring it is not only a good place to do business, but an affordable place to live as well.
Ian Mass is on COPE's council caucus and manages a large non-profit. Rachel Marcuse is COPE's Executive Director.
