FIRST READING: David Eby’s pledge to make B.C. the highest taxed jurisdiction on earth

BC NDP leader and Premier David Eby crosses a fence following an election speech focused on healthcare at Peace Arch Provincial Park in Surrey, BC. Photo by Photo by Jason Payne/ PNG

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In a Sunday election pledge, B.C. NDP Leader David Eby proposed a new tax policy that would give his province one of the highest marginal tax rates on earth.

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If implemented, the top marginal tax rate in B.C. would hit 57.5 per cent, meaning that 57.5 cents out of every dollar earned above a certain threshold in B.C. would be collected as tax.

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It wouldn’t just make B.C. the highest tax jurisdiction in Canada, but it would place British Columbians in a higher tax bracket than even some of the most notoriously high tax corners of Europe.

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According to the most recent figures from the OECD, top-earning British Columbians would be paying a higher tax on income than their well-paid peers in France (55.4 per cent), Japan (55.9 per cent), Sweden (52.4 per cent) and the U.K. (45 per cent).  

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In fact, they’d likely be paying more of their income in tax than any other jurisdiction save Denmark. Although Denmark’s top rate comes in at 55.9 per cent in OECD data, in practice, the Danish rate can rise as high as 60.5 per cent, according to a June analysis by PricewaterhouseCoopers.

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B.C.’s top tax rate would also push well ahead of California, the single most high-tax jurisdiction in the United States. According to the U.S.-based Tax Foundation, Californians pay a top income tax rate of 13.3 per cent. Which, when combined with a federal top rate of 37 per cent, comes to 50.3.

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The new tax rate was pitched by Eby on Sunday as a “millionaire’s tax,” as the new top rate of 24.5 per cent or more only applies to annual incomes of $1 million or more.

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This would be added to the top federal rate of 33 per cent (which kicks in for incomes higher than $258,482) for a total of 57.5 per cent.

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Nevertheless, Eby would also be raising taxes for non-millionaires. Any income above $190,405 would be taxed at 18.8 per cent instead of 16.8 per cent, and any income above $265,545 would be taxed at 22.5 per cent instead of 20.5 per cent.

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As such, any British Columbian earning more than $266,000 would already be experiencing a combined rate of income tax (55.5 per cent) higher than almost anywhere else on earth.

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In a Monday social media post, University of Calgary economist said the new rates “would raise BC to the highest income tax rate since 1981, and make the province (by a decent margin) the highest tax rate jurisdiction in Canada.”

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He noted that the new tax threshold would put B.C. at particular contrast to next-door Alberta, whose top marginal rate sits around 48 per cent.

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Wrote Tombe, “the gap with Alberta would be back at 1990s levels.”

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Eby said the measure would bring in $1 billion in new revenue, which he pledged to spend on “improvements in health care and to lower costs for British Columbians.”