KAMLOOPS — For those who follow this column on a regular basis, you probably know that January is a traditional springboard for my semi-annual, ”Who You Trying To Fool?” fees and taxes blog.
So here we are in British Columbia with one of the lowest tax regimes in the country and a government policy intent on keeping it that way. Sounds perfect and we should be the envy of other provinces. However, just as in every other jurisdiction in the West, lower taxes (Reagan and Thatcher supply-side economics) have not created the promised private sector job boom or investment. In fact, this year, B.C. fell from fifth to ninth place for the percentage of our population holding down a full-time job.
What lower taxes have created though — apart from fewer jobs — is a cash crunch for a government that obviously hasn’t thought this tax thing through.
Lower taxes provide good optics but when artificial in every other way, we eventually must come to grips with reality and the two choices it leaves us. Pay more taxes or reduce services, both of which can be politically unpopular and even more so given we are entering an election cycle. So, as a government what do they do for money?
Christy Clark’s government has a sly political solution designed to create the illusion of lower taxes. Apart from the obvious cutting and reduction in services, Ms. Clark has chosen the hidden fees-dividends-royalties tactic as their primary method for getting money into general revenue.
For instance: BC Hydro has seen a 40 per cent increase in rates since 2010 and with a four per cent increase this year and another four per cent in 2018, it’s only going to become more expensive.
These increases are not necessarily tied to the cost of producing energy but more to the “dividend” the province takes from BC Hydro.
According to the Vancouver Sun, the province has taken $5.4 billion in dividends from Hydro since the early ‘90s. Typically dividends are paid from profits earned but quite often BC Hydro hasn’t had the money for these payoffs (over 60 per cent of the time) so Victoria forces them to borrow the necessary funds.
The province brags about no tax increase while increasing your Hydro bill in order to pay for the money they took from the Crown Corporation in the first place.
Switching Crown corporations, in 2010 your average ICBC cost was $1,450 and by 2016 that vehicle was costing $1,730 to insure. That will rise to $1,816 in 2017 and by 2020, some experts are suggesting premium increases will have reached $2,487 for a similar type car.
Now you would be forgiven for thinking it is simply a reflection of the cost of doing business but in fact it’s a tax grab as the province collects an annual “royalty” from ICBC. The last one came in at $1.2 billion — yes that is a ‘B’ — and it went straight to general revenue.
Consider this for a moment. ICBC collected an extra $1.2 billion from you that had nothing to do with the cost of insuring your vehicle. It was a tax the government hid and required ICBC to quietly collect on the province’s behalf.
It’s still not enough, though, so the low tax illusion looks to cuts and reductions in a desperate attempt to sustain something that is unsustainable.
There is no denying that governments need money to operate and the primary source for those funds comes through taxation. Why though, does this government feel the overwhelming need to pretend otherwise?
This is a tax system that is not working. It is a tax system based on smoke and mirrors and deceptive moral and ethical practices that are taking advantage of you while simultaneously degrading and marginalizing those who can’t fight back. It is a tax system that seems to intentionally hide the truth while taking your money.