The Canadian Taxpayers Foundation continues to say that the proposed 0.5% Congestion Improvement Tax will result in an average household tax increase of $258.
This number is wrong. Plain and simple, it is wrong. I’ve shown this before [here] and here], but I just found a third way to show that they’re wrong.
Back in 2011 BC had a referendum on keeping the Harmonized Sales Tax. An independent panel came up with a report titled HST or PST/GST? It’s Your Decision. In it they presented different statistics and facts to give a neutral viewpoint on the pros and cons of either keeping the HST or switching back to the separate PST/GST.
Page 7 of that report presents these statistics on how British Columbians spend their money, and what percentages are taxed:
This is what is now happening at the cash register.
17 per cent of your spending has an extra seven per cent sales tax.
29 per cent of your spending is subject to the same total sales taxes as before. It has not gone up or down.
54 per cent of your spending is not taxable under the HST or the PST/GST. Nothing has changed.
Let me clarify those three items. The first is goods and services that were not subject to the PST but were subject to the HST. The second is goods and services that were subject to either only the GST or were subject to both PST and GST. The third is goods and services that were non-taxable.
BC returned to the separate GST and PST. What this means is that the first group of goods and services are no longer taxed under the PST. The third group of goods and services were never subject to the PST and they aren’t now. That leaves the second group.
Some of the second group (29% of spending, remember) is subject to GST only, and some of it is subject to both GST and PST. Let’s assume for a minute that everything that you buy that falls in this group is subject to the PST. Let’s also assume that you’re an average household and that your take-home pay is about $55,000 per year (remember, I showed that in an earlier post). Let’s further assume that you spend every dollar that comes in.
That means of your $55,000 you’ve spent 29% of that on goods that are subject to the PST, or $15,950. If you multiply that by the 0.5% CIT, your yearly increase in taxes paid comes to $79.75.
That means for extra taxes of 22 cents a day you get a new, safer, wider Pattullo Bridge. You get a SkyTrain tunnel down Broadway in Vancouver. You get light rapid transit in Surrey and Langley. You get eleven new B-Line bus routes, you get more buses, you get more SkyTrains, you get more SeaBus service, you get more HandyDART service, you get more West Coast Express service, you get more NightBus service, you get more bikeways. You get an improved transportation system in Metro Vancouver.
But just remember, when the Canadian Taxpayers Federation says “the average household will face an annual tax increase of about $258” they’re completely wrong.