Why You (and Your Customers) Are Struggling to Get By
By: Jordan Bateman, British Columbia Director of the Canadian Taxpayers Federation
It’s a phenomenon played out thousands of times a day, in many different settings across British Columbia. A business owner notices a loyal customer cutting their usual order down: “I’m sorry,” the customer says. “Money’s just too tight – I can’t afford it.” An accountant reports to his boss on concerns over a business’s bottom line: “Our expenses are exceeding our revenues. We need to cut back.” A client stops coming around: “We’re really struggling right now.” A construction company gets a call: “Can we reduce the cost on that a little bit?”
If you and your customers are finding it harder and harder to scrape by, you’re not alone – and you’re not wrong.
Taxes – federal, provincial and municipal – continue to rise, eating away at the disposable income of British Columbians. With government taking more and more money, there’s less left in consumers’ pockets.
Personal Taxes
The B.C. government’s own statistics shows how taxpayers have fallen further behind over the past five years.
In 2009, a two-income family of four making $90,000 a year, paid $8,761 in total provincial and municipal tax, including income tax, property tax, sales tax, fuel tax, Medical Services Plan tax and carbon tax.
Five years later, in 2014, that same family paid $9,922 in those same taxes – nearly $1,200 more. That means the family paid $100 more per month in provincial taxes. Put another way, that’s $100 less every month that the household could spend in local businesses.
Five years ago, at the end of every week, those families had an extra $20 bill and a bonus twoonie left in their pockets that government now takes. That’s $22 more, every single week of the year, going to government, not local businesses.
We see this tax increase in all income brackets:
- A two-income family making $60,000 a year pays nearly $1,000 more.
- A low-income family of $30,000 pays $700 more.
- A single person making $80,000 pays $500 more.
- An elderly couple with $30,000 in pension income pays $429 more.
These taxes don’t include hidden tariffs, federal taxes or increases in government-run utilities. In B.C., those utilities are another way families are being squeezed. BC Hydro electricity, ICBC car insurance, BC Government liquor, municipal water, municipal sewer, municipal garbage, municipal drainage, BC Ferries fares, Port Mann and Golden Ears bridge tolls, cigarette taxes and transit fares have all gone up in the past five years, further eroding people’s disposable income. The property transfer tax hasn’t been increased, but the property values it is charged on are soaring, meaning more money from taxpayers.
The Fraser Institute estimates that Canadian families now pay 42.1 per cent of their income to the government in taxes.
It’s about to get worse. Medical Services Plan taxes are already set to jump again in 2016, as are bridge tolls and ICBC and Hydro rates. Municipal governments in virtually every city across B.C. are planning major tax and utility increases – most far higher than the rate of inflation. And B.C. is considering restarting annual carbon tax increases in 2018 by as much as 2.2 cents per litre of gas.
No wonder customers have less money to spend – they’ve already handed it over to government.
Business Taxes
This creates a double hit for businesses. Not only do they lose out on the money customers could be spending for their services and products, but businesses are also seeing their tax burden grow. Less money in, more money out: a painful combination for a business.
As bad as municipal taxes and utility fee hikes are for homeowners, they are even worse for business owners, who paid between 2.5 and 8 times more in local taxes, depending on the city they are located in. A $40 annual increase in a homeowner’s property tax could translate into another $320 tax hike for a business.
Many of these tax hikes have shrunk bottom lines. ICBC and toll hikes make it more expensive for businesses to insure and move their vehicle fleets. Hydro increases makes it more expensive to buy electricity.
On the payroll side, continual contribution increases to the Canada Pension Plan, Employment Insurance program, and Medical Services Plan tax, have made it more expensive to employ people. Instead of adding jobs, many business owners are simply trying to keep their staff level as is.
It’s a tough time to be in business, with both higher taxes going out and less consumer cash coming in.
What Can Be Done?
Taxpayers cannot be silent on these issues. The special interest groups keep coming to government, demanding billions more in spending and billions more in taxes. It’s up to us push back against those lobbyists.
The first step is to get government to realize they have a spending problem, and they are overtaxing us to pay for it. We need to aggressively research and highlight areas where government is wasting money or doing work that is better suited to the business sector. Further, we need a simpler, fairer tax code, with reduced taxes for every person and business – not targeted tax credits for special interest groups.
Here are five ways to fight back against higher taxes:
- Join the Canadian Taxpayers Federation (CTF). The CTF is Canadians’ national voice for taxpayers. Become a CTF supporter for free by signing up at taxpayer.com, keep track of our work, and receive action updates on how you can help us fight for lower taxes and less government waste.
- Push your associations to fight for lower taxes. Are you part of a business association? A neighbourhood group? A union? A professional body? A ratepayers organization? Then let them know that lower taxes is a key priority for you. The more voices pushing for a lighter tax burden, the better.
- Write your MP, MLA and mayor. Politicians make these decisions, and some claim they never hear from the public about lowering taxes. Prove them wrong – send them an email, call them, or bring up your concerns in person. Let’s put lower taxes on every elected official’s radar.
- Take every opportunity to make your voice heard. Governments often offer the public opportunities to make comments on budgets and tax issues. When you read in the paper or hear about a chance to make your feelings known, take it!
- Get your circle involved. You’re not alone. Consumer debt is way up in B.C., in no small part due to the growing tax burden. Talk to your friends, family, customers, and vendors about the need for lower taxes. Together, we can change the politicians’ minds.
