Lowering Taxes for Every British Columbian

In Brief:

  • Reduce the average family’s annual tax burden by over $5000.00
  • Raise the base exemption on income to $44,000.00
  • Eliminate “sin” taxes on tobacco and liquor
  • Eliminate the gas tax and carbon taxes
  • Eliminate the Employer Health Tax
  • Replace the provincial charitable donation tax credit with a $750 charitable donation tax refund
  • Reduce the size of government by 13%

In summary:

The BC Libertarian Party has the most progressive tax policy ever offered to voters in British Columbia.  Our collection of policies target the taxes paid most often by average British Columbians. Governments of the past have talked big about reducing taxes on “the poor,” “the working class,” and “the middle class.”  New tax credits against their income taxes are unveiled all the time. But they pale in comparison to the multitude of hidden taxes paid on alcohol, fuel, car insurance, tobacco, and others that are only reflected in the higher cost of everything we buy such as carbon taxes, payroll taxes, corporate income taxes.  Those with lower incomes pay a higher proportion of their incomes toward these sorts of consumption taxes than do those with higher incomes. While a struggling young family often pays little or no income taxes, their share of overall taxes contributed to the government remains very high. Our goal is to reduce or eliminate this burden.  Our policies combine to reduce total taxes and fees paid by an average family of 4 by over $5000 annually.

Through a series of legislative actions the BC Libertarians will eliminate sin taxes entirely, abolish anti-competitive cartels and price-fixing monopolies, and liberate entire swathes of the economy to competitive forces.  We are specifically targeting institutions where reform will deliver immediate cost savings to British Columbians. Recipients of corporate welfare will see funding eliminated and instead benefit from an overall lower tax environment.  

The tax code is a convoluted mess of tax credits for individuals and businesses set against income taxes.  However, the credits are “targeted” toward groups of the population the government deems worthy of relief. If you don’t live your life the way government approves (go to school, have children, drive an electric vehicle) you receive no tax credits.  It is an exercise in social engineering. It is costly to administer, audit and comply with. The tax code could be made much simpler by eliminating all of these credits and instead increasing the base exemption on income by an equal total amount. Under our plan, no British Columbian will pay provincial personal income taxes on income earned under $44,000.  

Governments have become addicted to tax revenues to close funding gaps in essential services.  The politicization of ministry funding creates an institutionalized inertia inside the largest ministries. Successive governments have been held captive to the pressure of ever-increasing budgets.  Adoption of productivity-enhancing technologies are seen as a threat to entrenched interests. As a result, the best our governments have mustered is slowing the pace of budget increases. Stopping and reversing this momentum requires a completely different approach.  The BC Libertarians will reduce bloated healthcare administration costs without reducing delivery expenditures. We will tie funding to outcomes and reduce funding for programs that do not deliver acceptable returns compared with their cost. We project that our policies will combine to reduce government expenditures by 13%.

 

Summary of Annual tax savings for the taxpayer:

Average (Ind.) Average (family of 4)
Liquor Savings $660 $1320
ICBC Savings $500 $1000
Fuel Savings $313 $626
Income Tax Savings $283 $566
Employer Health/MSP Savings $414 $1656
Total $2170 $5168

(Numbers are approximate. For illustrative purposes only.)

At length:

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Revenues

The average BC family (earning combined $114,800) pays $48,500 in taxes, approximately $19,000 of it to the BC government.  Many of those taxes are not on their income but on the goods that they buy or the businesses they frequent.

 

Liquor/Tobacco Taxes  (for details on Liquor Distribution and Taxes click here)  

The BC Libertarian Party will eliminate liquor and tobacco taxes. Sin taxes do not discourage addiction and dependency.  They don’t even discourage overall consumption. BC has taxed alcohol punitively for over a century yet drinking habits remain mostly unchanged.  The government is a poor authority on individual behaviour. As merely a group of individuals, government does not possess any special status to dictate moral or correct behaviour.  When granted such a status, it’s only logical that the power leads to abuse and a “do what we say and not what we do” mentality. Worse, by using their position of power to signal moral virtue, the government undermines the traditional moral authorities, namely the family and local community.

Tobacco taxes are increasingly creating incentives for black markets to operate in BC, opening the door to organized crime.  Police resources, already stretched thin, are insufficient to enforce the illegality of contraband and resale cigarettes. The solution to this problem is simple.  Eliminate provincial excise taxes on tobacco products and permit the importation of foreign made products to compete based on price. Federal and provincial governments cut excise taxes on tobacco in 1994 and they succeeded in eliminating much of the black market.  Bringing a large portion of the market back to the light of day helped to balance out the losses from excise tax reductions. Notably, this campaign did nothing to slow the already falling rates of smoking. The unequivocal science respecting health risks, combined with awareness campaigns and social ostracization continue to be the primary factors contributing to fewer people taking up smoking and more smokers quitting.

The BC Libertarian Party opposes any Cannabis taxes beyond PST, and will repeal any taxes implemented.  The primary reasoning for legalization is to eliminate the black market and the organized crime it funds.  The legal market needs to compete on price for what most regard as a fungible commodity. Taxes prevent this and will ensure the continuation of the black market.  This is poor policy and should be scrapped.

BC Libertarians believe that what you do with your body and your income is your business.  If there is moralizing to be done, it should be done by loved ones or community peers. For a vast majority of people who drink responsibly, smoke cigarettes or drive gas powered cars, the extra disposable income received from these tax eliminations can be used toward productive ends.  

There is no credible evidence that the removal of these sin taxes will cause a significant change in consumption habits. Accordingly, we do not believe healthcare costs will be impacted in any material way.  

Fuel and Carbon Taxes

The BC Libertarian Party would eliminate provincial fuel and carbon taxes, saving the average family over $1000 annually. Everybody pays more when transportation is taxed to the extent that it is today.  While it is costly to build and maintain transportation infrastructure, the majority of those costs are not funded by fuel taxes and carbon taxes. Most of the maintenance is paid for by municipalities while capital projects are funded independently.  Tax revenue received on fuel (and soon carbon) goes into general provincial government revenues.

Because these taxes are applied to every grocery item we buy as well as gasoline consumption, they are regressive, affecting those least able to pay more than the wealthy.  They also unfairly target those that must commute to work, adding insult to injury for those on the run from unaffordable urban housing and traffic congestion.

Fuel taxes and carbon taxes are a significant component in the cost of living.  The BC Libertarian Party can only affect the provincial portion of the taxes, however.  BC Libertarians would review regulations that stand in the way of new refining capacity in the highest demand areas, so transportation costs of gasoline can be reduced further.  

Employer Health Tax

The BC Libertarian Party will eliminate the Employer Health Tax. The BC NDP is replacing the MSP premiums paid by individuals with a tax on employers of up to 1.9% of total payroll.  This approach raises the barriers to job creation, discourages business expansion, encourages businesses investment in automation technology, and puts pressure on wage and benefit increases for employees.  Like with individuals and their tax brackets, business owners will attempt to avoid the triggering of higher health tax rates by reducing their overall business activity and hiring fewer workers. Employers only budget for labour cost increases that they can afford.  With an employer tax on payroll, they will instead postpone their plans for wage increases, or accelerate their plans for automation. Marginal workers are the ones most affected by this change in cost burden, making it a very regressive tax by excluding these most vulnerable workers from the workforce entirely.  

Like with minimum wage increases and other interventions, artificially increasing the cost of labour will have a negative effect on the most vulnerable, teenagers and students, and those with a disability that reduces their productive capacity.  Current trends have workers joining the workforce at later ages, reducing their lifetime earning potential, human capital acquisition and overall sense of contribution and worth. The government should not add fuel to the fires driving these trends.

Charitable Tax Refund

The BC Libertarian Party will introduce a $750 income tax refund dollar-for-dollar to taxpayers that have donated to a registered society in the previous year.   With such a tax refund there would be no reason every tax paying British Columbian would not donate the maximum amount to some charity that is worthy in their minds.  This will reinvigorate non-profits to once again be the conerstones of our communities. To qualify, charitable organizations would need to maintain administrative costs below a maximum threshold appropriate for its category, as well as fulfill existing requirements for the maintenance of society status.  Political entities would be ineligible for these funds.

The purpose of the existing federal charitable tax credit is to encourage people to give directly to institutions like hospitals, homeless shelters and youth sports programs, among many others.  These organizations have long histories of being vastly more efficient than taxpayer funded equivalents. They improve outcomes with community-based strategies vs. those dictated from afar. They don’t incur nearly as much administrative cost as direct giving to the delivery agency would, in part because they are often run by volunteers.  Charitable organizations are also less likely to be swayed in their decision making by political motivations.

It is expected this program will effectively displace the government provision of certain social services that are particularly well-suited for societies to provide.  Wherever possible, the BC government should try to reduce its reliance on federal transfers. The BC Libertarians will lobby the federal government to match the $750 tax refund, in exchange for equal reductions in social welfare-related transfers to the province.   We will also lobby the federal government for an additional $750 tax refund to those who have donated an equal or greater amount specifically to health delivery agencies such as hospitals or treatment centres, in exchange for similar reductions in federal health transfers.  The combined effect of receiving these tax refunds would be a base exemption for maximum donors of $53,500 provincially and $21,600 federally (doubling the existing exemption).

Growth Funded Deficit Reduction

Taxes that affect disposable income for every British Columbian have an effect on their total spending.  Eliminating those taxes add back to the spending power of everyone, creating jobs, real wage increases and competitiveness on a global scale.  

The BC Libertarian Party will pursue completely open trade agreements with the other provinces and other markets.  Trade is good because it allows for an ever greater division of labour. The increasing specialization it enables makes domestic producers more attractive and competitive in open global markets, increasing the wealth of everyone involved to a far greater extent than any closed economy trying to produce everything for itself.  For example, the economic potential of eliminating intra-provincial trade barriers has been estimated as high as $7500/family. Indeed, incremental steps made in the past to liberalize provincial trade in wine have resulted in Canadian wines going from laughing stock to internationally renowned, as the various disparate regions learned to do only what they do best and trade that for what the other regions specialize in.  Our reforms will see the same sorts of productivity enhancements across all industries.

The BC Libertarian Party will raise the base exemption to $44,000.00.  By raising the base exemption on income taxes paid by individuals, we expect the marginal propensity of workers to reject further offered work to be diminished.  In other words, workers will take more hours knowing the earnings will end up in their pockets. Fewer people working cash jobs and more hours worked per employee will drive total wages higher.  

The combined effect of tax cuts will be faster economic growth, and paradoxically, more sales tax revenue and more corporate/personal income tax revenue.  The BC Libertarian Party will use these revenues equally to further reduce taxes and pay off provincial debt.

Expenditures

Tax cuts need to be paid for either by corresponding cuts in expenditures or regular sales of assets.  The BC Libertarian Party will do both and will select the expenditures which are least effective in delivering desired outcomes and those capital assets which would be better managed by municipal governments, non-profits or private corporations.  

Tax Enforcement and Administration Costs

Our plan replaces $700 million of convoluted tax credits with a higher basic exemption for everybody.  We project that the impact of these changes on the budget will be neutral, but that administrative cost savings would be inevitable.

Those targeted for the $700 Million in annual tax credits, are primarily those of low incomes.  By increasing the base exemption to such a high level, the same ends are achieved with a much simpler process for filing taxes.  Shuffling money back and forth between you and government gets expensive. The replacement of these tax credits with a higher base exemption minimizes the complexity of filing taxes, the need to hire accountants to ensure all eligible credits are properly applied for, the need for the finance ministry to then audit that all to ensure the correct people are being given the credit, among other administrative costs.

Post Secondary

Under our plan, subsidies to post-secondary would be phased out over a 10 year period, reducing expenditures by $400 million annually.  Please see our education policy (est. 2019) for more information and background on recent research about the societal returns to post-secondary education and possible alternative methods for enabling social mobility through the accumulation of human capital.  

Post-Secondary subsidies are particularly costly to taxpayers, consuming roughly $4 billion dollars annually.  These subsidies are intended to make tuition more affordable. However, schools are in business to make money and like all businesses they have difficult decisions to make in covering their costs.  To match supply with demand, these subsidies do not reduce the cost of school, but are simply added to the amount students are generally able to pay and paradoxically increase the costs of education.  In other words, the subsidies increase demand for post-secondary education and push prices higher. The result is higher tuition costs, students leaving school with larger debts, higher taxes, and a less productive economy.  

Ending ICBC

We project that our plan to end ICBC’s Monopoly will save BC tax-payers nearly $1 Billion annually. The insurance monopoly is a mess and its losses are directly related to its centralized control, lack of market-based competition and politicized incentives.  It is a testament to the dysfunction of centralized economies that our government loses money running an insurance monopoly. Our plan to end ICBC’s monopoly, convert it to a co-op owned by remaining premium paying drivers and to depoliticize auto insurance will directly subtract from government expenditures.  Please see our detailed policy document to End ICBC.  

Ending Boutique Tax Credits and Corporate Welfare

The BC Libertarian party will remove the $600 million film industry tax credit. Industries should be able to survive on their own without government assistance.  Subsidies breed dependence, which stifle creativity and productivity. The BC Film industry and related fields have grown to consume $600 Million annually in special government tax breaks.  Before long they will be considered “too big to fail” and will be able to hold the government hostage by demanding even more. BC Libertarians do not believe in corporate subsidy of any sort and will remove all such favouritism for special interests.  A regime of significantly lower taxes, as we are proposing, will be enough to target all mobile industries to relocate to British Columbia, the film industry included.

Healthcare Administration

We propose to liberate the administration and delivery of our universal healthcare. BC Libertarians take issue with the inherent inefficiencies that exist with the administration of the system by a centralized and politicized control structure, and with how those funds are deployed to delivery agencies.  We expect some efficiency gains through competition in delivery of care and through incentivized payments as global budgets are phased out. These gains will help to moderate the budgetary effect of growing health expenditures.

We plan to reduce health administration expenses by $125 million annually over a ten year period through increased administrative efficiency. While we cannot affect the funding source (taxpayers) for health care as a provincial party, we can affect the administration and delivery with reforms intended on improving both productivity and delivering more appropriate patient-centred care.  Under our plan, there would be no change in universal coverage for all British Columbians compared to what is currently covered.

Healthcare expenditures are resistant to budgetary cuts due to a rising population, aging demographic, and steadily increasing availability of new treatments.  Governments across the country have made many attempts at getting health budgets under control, but if the above factors don’t confound them, they are confronted with a paradox: improving the healthcare system (e.g. reducing wait times, patient satisfaction efforts, extending lifespans) stimulates more demand for healthcare resources.  Additionally, many people would (and already do, where allowed) choose to spend more money on their or their children’s health as a first priority. Reducing the total amount spent is neither realistic, nor desirable.

The BC government is currently funding an opposition to the Cambie Surgery Centre led by Dr. Brian Day.  BC Libertarians would remove the opposition and allow Dr. Day to proceed through the courts to the federal level, which is the appropriate venue for issues pertaining to the Canada Health Act.   Please read our healthcare policy (est. 2019) for more info on the above reforms.  

Affordable Housing Subsidies

The BC Libertarian Party will eliminate provincial affordable housing subsidies, saving an estimated $500 million annually.  Affordable housing subsidies for purchasers make housing less affordable. Their introduction encourages insiders to speculate on the price gains that will occur when all the new buyers soon compete for the same properties with a larger borrowing capacity.  

Affordable housing subsidies for renters may marginally increase the supply of rentals, and thereby lower the price.  But the cost of doing so, at nearly $500M annually (projected to increase substantially) is far too great for the actual impact it will have (even if successful, only keeping up with population growth).  When combined with the poor incentives introduced with changes to the Residential Tenancy Act, it is likely the number of rental units per person will fall again. BC Libertarians would remove the subsidies completely, and instead focus on measures that will increase supply of entry-level accommodations, such as reducing the complexity of building codes and encouraging municipalities to offer extra Floor Space Ratio for rental only buildings.  We will put property owners back in the driver’s seat under the tenancy laws, allowing more to put their properties up for rent without the risk of being locked in with a bad tenant.

Asset Sales

We project receipt of $10 Billion over 5 years through Asset sales.

Asset sales will be considered where qualified purchasers can be found at an acceptable price.  BC has $66 Billion in debt and commits $1.2 Billion per year to debt servicing costs. Municipalities have an interest in ensuring their residents’ good health.  Sweden, after reforming their medical system in a similar way to our proposals made municipalities the primary owners of hospitals. We would encourage the charitable hospital societies and municipalities to form joint ventures on the purchase and operation of BC’s largest hospitals.   Assets owned through PavCo such as BC Place and the Vancouver Convention Centre, as well as crown corporations like the BC Lottery Corporation can be sold to realize many billions of dollars in debt cancellation. Provincial lands can be released for development, as can high value commercial and office space like the Liquor Distribution Branch and the ICBC head office.  

The future security of access to affordable infrastructure is better defended by eliminating debt and the need to service it, a cost that currently sits at nearly $500/year per person and with rising interest rates is projected to rise considerably.  Even if these assets were operated by non-government organizations at prices not as favourable to consumers (a speculative assumption at best), the cost savings from debt elimination would more than compensate. At every opportunity, this debt should be eliminated.  It is economically unjustifiable as well as ethically dubious to burden non-consenting future generations with the repayment of debts to fund the profligate tendencies of today’s unleashed governments.

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