With just a week to go until British Columbians go to the polls, the BC Liberals are accusing the NDP of plans to raise the top tax bracket by nearly 10 per cent, potentially causing a brain drain.
The party has seized on new numbers from the B.C. Business Council, which argue that the tax increases in the NDP platform coupled with a need to pay for scrapping the MSP — while shielding low-income people from the effects — could result in a top marginal tax rate of 56 per cent or higher.
That’s up from the current rate of 47.7 per cent combined federal and provincial tax top earners pay.
Economist Jock Finlayson co-wrote the analysis and admits it’s speculative, as the NDP has not specified plans for such an increase in its platform, however he says the logic plays out.
He says while higher taxes for the wealthiest might not seem like a big deal to an average worker, it could have a wider impact on the economy.
“If we’re going to have much higher top tax rates here than other provinces or other parts of the United States, it’s going to be harder to attract companies to put head offices here, it’s going to be harder to create high paying sustained employment here, it’s going to be hard to generate a bunch of business innovation.”
Finlayson says with major tax cuts on the agenda in the U.S., putting B.C.’s top tax bracket in this range — should it be borne out — could put rates 15-20 per cent higher than south of the border.
LISTEN: BC Liberals accuse NDP of plans for massive top bracket tax increase
BC Liberal Vancouver-Quilchena candidate Andrew Wilkenson says that will hit B.C. right in the tech sector, just as the province markets itself as a potential Silicon Valley North.
“It kind of destroys our competitiveness in the tech sector. Let’s not forget Washington State has no state income tax. So if people are setting up companies here, they start to look south and say gee, we could do this in the USA, pay our employees the same amount and they’d have more take-home pay.”
LISTEN: BC NDP dismiss tax claims as speculation
But the NDP are calling foul, with Victoria-Beacon Hill candidate Carole James calling the numbers a fabrication.
“It uses the word speculation. They’re speculating,” she says of the Business Council, who she argues has ulterior motives for wanting a BC Liberal win.
“The BC Business Council has pushed for years, and again this past year, to bring back the HST. To put that back on the table to have that discussion. They know that the NDP like the people of British Columbia have said no to the HST. But they see an opening and they see an opportunity.”
James says other provinces have managed to pay for healthcare without HST without driving away business and says her party has been clear about its tax plans in its platform.
“We do increase taxes for the top two per cent of income earners in British Columbia, we increase taxes on corporations by one per cent, which will put is in line with Alberta, and Saskatchewan, and Manitoba keeping our economy competitive.”
Asked about the HST today, Liberal Leader Christy Clark said her party would “absolutely not” bring it back, though said her party would be open to other ideas put forward by a panel on tax competitiveness.