http://www.bcfederationist.com April 3rd 2012
B.C. and Alberta have most unequal after-tax incomes in the country, says Canada West Foundation
British Columbia’s worsening record on income inequality – that is, the growing disparity between the income earned by our province’s wealthiest families, and the rest of us – was highlighted in a disturbing report released late last year by the Canada West Foundation.
Based in Calgary, the Canada West Foundation is hardly a left-wing or labour-friendly think-tank.
The chair is Jim Dinning, a former Alberta finance minister (under Tory premier Ralph Klein) who last year was chosen by the BC Liberals to head a so-called “Independent” commission to study – i.e., endorse and promote – the much-loathed Harmonized Sales Tax.
Dinning was named to the HST panel in January 2011, and weeks later, in April, he and Klein attended a special dinner so each could receive a ‘Tax Fighter Award” from the Canadian Taxpayers Federation. B.C.’s news media chose to ignore the event.
At least four British Columbians with strong ties to the BC Liberal government sit on the foundation’s board.
They include Brenda Eaton, chair of the B.C. Housing Management Commission and a former deputy minister to ex-premier Gordon Campbell; Ida Goudreau, the one-time TimberWest executive appointed by the Campbell government as the first chief executive officer with the Vancouver Coastal Health Authority; and Jock Finlayson, executive vice-president of the B.C. Business Council.
Eaton and Goudreau previously sat together on the board of directors of private-sector company, Terasen Gas, and both today are on the board of Fortis BC, which in 2007 paid $3.7 billion to buy most of Terasen’s natural-gas distribution assets.
The fourth is none other than Geoff Plant, previously a BC Liberal MLA and Attorney General – and former Victoria room-mate of Gordon Campbell.
By no stretch of the imagination can the Canada West Foundation be seen as sympathetic to the political left, or to non-business interests. And that lends credence to the findings in the foundation’s report on inequality in Western Canada.
“In terms of the growth in income disparities in the West, all four provinces have higher levels of inequality today than they did 20 years ago,” observed the report, published on November 15.
“The income gap has widened the most in B.C., with the degree of increase shrinking as you move eastward.”
Ouch. Usually it’s great to see British Columbia leading the other western provinces (or even all of Canada) in economic performance, but such clearly is not the case with income inequality.
The Canada West Foundation found that the ‘bottom quintile’ of B.C. families – that is, the 20 per cent with the lowest annual incomes – earned just 3.9 per cent of total income across B.C. That was the lowest figure in any of the province in Western Canada.
The proportion of total income earned by B.C.’s second quintile of families was a mere 9.4 per cent; by the third, 15.2 per cent; and the fourth, 24.9 per cent.
In total, the income earned by all of those families not in the top quintile – that is, 80 per cent of all B.C. families – added up to just 52.5 per cent. In other words, the combined incomes of four of every five B.C. families equaled just half of all incomes in our province.
Which means that the top quintile – the 20 per cent of B.C. families enjoying the highest incomes – earned a whopping 47.5 per cent of all annual incomes.
Shockingly, that latter number was the highest among all of the western provinces.
And, almost unbelievably, the numbers were even worse when the Canada West Foundation examined incomes after taxes had been paid.
With those calculations made, the share of total income received by British Columbia’s top quintile of families – again, the 20 per cent with the highest incomes – soared to a stunning 63.5 per cent.
Under BC Liberal tax policies, then, just one-fifth of all B.C. families take home nearly two-thirds of all after-tax income in the province.
By comparison, the one-fifth of families in the bottom quintile earned a mere 0.7 per cent of all after-tax income.
Looked at another way, those in the top quintile received more than 90-times as much after-tax income as the bottom quintile.
“The redistributive effect of government transfers and progressive taxation in B.C. and Alberta is lower than it is elsewhere in the country,” said the Canada West Foundation report.
“As a result, B.C. and Alberta have the most unequal after-tax incomes in the country.”
Perhaps chastened by the Canada West Foundation’s analysis of B.C.’s glaring income inequality, Christy Clark and the BC Liberals leapt into action.
What did they do?
On December 30, mere weeks after release of the Canada West Foundation report, the Clark Liberals launched a media campaign against Adrian Dix – the leader of the New Democratic Party since April 2011 – for B.C.’s economic performance in the 1990s!
Instead of taking immediate action to correct the growing – and worrying – gap between rich and poor in British Columbia, Clark and the BC Liberals opted to look back more than a decade to attack Dix and the NDP, with a campaign filled with half-truths, untruths and outright lies.
Space does not permit a refutation of all of the errors and mis-statements in the BC Liberals’ attack on Dix, but consider the following assertion: “British Columbia became a HAVE-NOT province [in the 1990s], dependent on other provinces in Canada to pay our way in confederation. Under the BC Liberals this situation has been reversed.”
A have-not province is distinguished from the others by the receipt of equalization payments from Ottawa. Over the last three decades, British Columbia has obtained such transfers on nine separate occasions.
In the 1980s, B.C. – then under Social Credit governments led by Bill Bennett and Bill Vander Zalm – received three equalization payments from Ottawa. The first was for $139 million (in fiscal year 1983/84), the second, $35 million (1984/85), and the third, for $360,000 (1986/87).
In the 1990s, the NDP government led by Glen Clark received a single equalization payment of $125 million (in 1999/2000).
But over the last decade, our province got five equalization transfers.
The BC Liberal government first received $158 million (in 2001/02), followed by $543 million (2002/03); and then $979 million (2004/05); $590 million (2005/06); and $459 million in 2006/07.
The total of four equalization transfers made to B.C. in the 1980s and 1990s under Social Credit and the NDP: not quite $300 million.
The total of five payments in the 2000s when the BC Liberals were in government: an astounding $2.4 billion.
Yet the BC Liberals claim to have inherited a “have-not” province from the New Democrats – and then “reversed” the situation!
To be clear, the near-constant stream of falsehoods and deceit from Christy Clark and the BC Liberals is not the real tragedy in our province; it is the shocking and widening disparity between British Columbia’s richest and poorest families.
To that troubling problem the Clark Liberals have no answer, no solution; just rhetoric.
The Canada West Foundation’s report on B.C.’s income inequality provides yet another in a long list of reasons why a solid majority of British Columbians want a new government in Victoria.
NOTE: The Canada West Foundation’s analysis of worsening income inequality was confirmed in late January in a report released by BC Stats, the province’s chief numbers agency.
Jim Sinclair is President of the B.C. Federation of Labour
Published in the Columbia Journal