MSP health care tax up for the sixth time in five years
The Canadian Taxpayers Federation (CTF) warned that higher taxes are on the way for B.C. families and businesses as the B.C. government introduced their 2013-14 provincial budget today.
To balance the budget after four straight deficits, the B.C. government introduced three tax grabs – the sixth Medical Services Premium (MSP) tax hike in five years, an income tax increase on anyone making more than $150,000 a year and a corporate income tax hike. Even with all of those tax increases, the projected surplus is a razor-thin $197 million.
“These taxes hurt families by making it more expensive to live here and for businesses to set up shop and employ people,” said Jordan Bateman, CTF B.C. Director. “Coming on the heels of a return to the PST, the creation of good jobs will slow.”
The MSP tax has jumped from $108 per month in December 2009 to $138.50 in January 2014; a $366 annual increase, or 28 per cent over five years. The hike will cost British Columbians an extra $95 million in taxes – less than half of what the cabinet has squirreled away in a contingency fund for “priority initiatives.”
“Government refuses to listen to the families, entrepreneurs and small business owners reeling from all of these MSP increases,” said Bateman. “This tax has become a tremendous burden across the province – and today it got even worse.”
The government is also adding another tax bracket for people making $150,000 or more, and raising their provincial income taxes by more than two percentage points to 16.8 per cent. Examples from around the world (Great Britain, France and California) show that such measures don’t generate more revenue and instead drive important job creators to lower-tax provinces.
“We need a simpler tax system, not a more complicated one,” said Bateman. “These kind of increases always sound good on paper but rarely generate any benefit to government services.”
A corporate income tax increase from 10 to 11 per cent is another concern, as many B.C. businesses are already struggling with the return to the PST.
“You can trace today’s tax increases back to the economic boom times of 2005 to 2008,” said Bateman. “In their first term, the B.C. Liberals came in like fiscal lions, ratcheting down costs and cutting taxes. Unfortunately, they lost their way in the second term, growing spending by 6 per cent a year to pay for big raises for government workers and the Olympics. When bad times hit in late 2008, government was spending too much money to weather the storm effectively.”
Government’s decision to freeze the carbon tax is a small relief for taxpayers, especially in suburban and rural B.C. A better plan would have been to cut the tax altogether, as the CTF recommended.
Bateman noted that while the government’s revenue projections are conservative, its spending numbers – especially in health care – come in lower than the trend in recent years. Sixteen properties deemed surplus will also be sold to balance the books.
Jordan Bateman, B.C. Director
