In an atmosphere of downloading and calls for lower property taxes, an idea floated by the Cowichan Valley Regional District to create new revenue for municipal governments without dipping into the pockets of residents has passed its first hurdle – approval from the Association of Vancouver Island and Coastal Communities.
Rob Douglas, a councillor for the Municipality of North Cowichan, is the author of the idea of instituting a one per cent tax on big corporations in the province, and having that money flow to municipalities.
"The response had been really positive," said Douglas. "I think a lot of our local politicians recognize that with the downloading
from senior levels of government we can’t keep turning to property taxes and user fees can be very regressive revenue tools. We’re going to have to find new options to address this downloading. Hopefully this is just the start of something bigger."
A one per cent tax is about "creating a new piece to the pie" he said, rather than shifting the burden, and he emphasizes that this is not for small businesses.
It would not place an undue burden on large corporations either, he said, as B.C. currently has the second lowest corporation tax rate of all of the provinces and territories, and Canada’s federal rate is also low.
The resolution, now passed by the AVICC reads: Whereas local governments are heavily reliant on property taxes and need to
diversify their revenue sources; and whereas income tax sharing arrangements are common between senior and local government in other jurisdictions and British Columbia has the second lowest corporation tax rate
of all provinces and territories; therefore be it resolved that the Government of British Columbia be urged to increase the corporation tax rate by one per cent on large corporations as defined by the province and transfer any revenue from that tax increase to the local government level.
Douglas sees this as the start of a broader conversation that needs to begin about the whole taxation system.
"If you look back to our parents’ and grandparents’ generation, the period after the Second World War was a period of unprecedented growth and prosperity and equality," he said. "And we introduced a very progressive tax system which allowed us to create and fund these generous social programs. We’ve seen over the last few decades that this has
slowly been eroded and chipped away at and at some point enough is enough."
Taxing big corporations "more appropriately" is a good beginning, Douglas said.
He said conventional thinking would lead one to believe that the current provincial Liberal government would be ideologically opposed to such an idea but in 2013 they raised corporate taxes by one per cent.
Tax cuts for corporations in recent years, Douglas said, have not put more money into circulation in the Canadian economy as was the purpose of those cuts, but instead have led to huge corporate cash reserves.
The next step for the resolution is now to go for discussion to the Union of British Columbia Municipalities.