OP/ED: Tax plans for 2011 hit B.C. hard
The Canadian Taxpayers Federation (CTF) today released its annual New Year tax change calculations which provide projected personal income and payroll tax changes taking effect Jan. 1, 2011.
The CTF calculated the changes for a variety of income and family scenarios while adjusting 2011 income levels for inflation.
“Nearly every working Canadian will be paying more in income and payroll taxes in 2011,” said Derek Fildebrandt, CTF national research director. “In every province, family and income scenario, our research finds that the governments take from inflation-adjusted incomes will increase, in some case substantially.”
The 16 income and family scenarios in each province used in the CTF study averaged a 2 per cent increase in 2011 over 2010.
Payroll Tax Hike
Increases in employment insurance (EI) and Canada pension plan (CPP) payroll tax thresholds mean that anyone earning more than $44,200 will pay an additional $76, while employers pay an additional $110 in 2011 payroll taxes. Increases in payroll taxes are primarily attributable to the government’s creation of new, non-insurance based programs funded through EI premiums, causing the program to run a deficit.
“Rather than reform EI into an actual insurance program, workers are being stuck with the bill for new social programs,” stated Fildebrandt. “More than any other kind of tax, payroll taxes disproportionately hurt the working poor, meaning that they will see the steepest proportional increases on January 1st.”
The Good, the Bad and the Ugly Across Canada
“In previous years, there has almost always been winners and losers depending on income levels, family scenarios and what province one lives in. This year everyone loses, although some more than others,” said Fildebrandt.
While virtually every worker in Canada will pay more due to federal payroll tax increases, taxpayers in provinces with inflation rates above the national average will see a disproportionate increase in their effective tax bill, due to indexation gaps.
“Without a doubt, Ontarians are the biggest losers when it comes to tax changes on Jan. 1 with an average 4.3 per cent increase in the scenarios we examined.”
After adjusting for inflation, a single earner Ontario family with an income of only $45,000 in 2010 will see a hike of a 5.1 per cent, costing that family an additional $389. A dual income family making $80,000 will pay an extra $590 (3.5 per cent) and a single income family making $100,000 will pay $1,035 (3.6 per cent) more.
Also seeing large increases on Jan. 1 are British Columbians and Newfoundland and Labradorians with 2.9 per cent and 2.7 per cent hikes respectively, using the CTF’s income and family scenarios.
In British Columbia, Medical Services Plan Premiums go from $57 to $60.50 a month for individuals, from $102 to $109 for a couple, and from $114 to $121 for families of three or more. Individuals and families earning less than $30,000 annually get a 20 per cent break – premium reductions rise for lower income earners – those earning less than $22,000 annually pay nothing. But despite hiking premiums steeply – in order to keep pace with spiralling health care costs – the B.C. government has left the income cut-offs where they were a year ago. So if your family happened to break above $30,000 of income by $200 or so, all of your additional income, and more, will be clawed back. Homeowners living outside the Metro Vancouver, the Fraser Valley and greater Victoria will get a boost to the provincial homeowner grant – a $200 reduction in property taxes, through the new northern and rural homeowner benefit. The carbon tax goes up again July 1st on transportation and heating fuel – a rise of roughly 1.15 cents a litre for gasoline. Carbon tax credits for low income earners go up as well. B.C.’s corporate tax rate falls from 10.5 per cent to 10 per cent effective Jan. 1, part of the package of income tax reductions introduced to offset the introduction of the carbon tax. “British Columbians were expecting a 15 per cent cut in the provincial share of their income taxes on Jan. 1, but thanks to the cabinet flip-flop, they now face the second largest hike in the country after Ontario,” concluded Fildebrandt.
Derek Fildebrandt is the national research director for the Canadian Taxpayers Federation.