-- Download Massive Increase in the Rich and Corporations Paying No BC Income Tax as PDF --
BC is truly becoming a Caribbean tax haven for corporations and the rich. From 1999-2008,
- the number of corporations paying no income tax in BC is over 5 times higher
- the number of people making $100-200k/year yet paying no income tax is over 8 times higher
- the number of people making over $200k/year yet paying no income tax is almost 3 times higher.
A few weeks ago I wrote about how the BC government’s new financial documents show a history of intense tax cuts in the last decade. Based on information I received this week from a freedom of information request to the Ministry of Finance, we can explore how the BC Liberals are intentionally defunding the government through tax cuts, which starves public services and motivates privatization and a whole host of other socio-political diseases.
Further, you’d think that with such massive tax cuts, businesses would be able to afford an increase in the minimum wage at least once in the last nine years. I guess not.
Corporations Paying No Taxes
Here is the 10-year breakdown of “corporations with a permanent establishment in BC that filed tax returns and paid no BC Corporate Income Tax”:
| Year | Corporate Tax Rate |
Number of Corporations with over $500k in Revenue Paying No Tax |
| 1999 | 16.5% | <50 |
| 2000 | 16.5% | 61 |
| 2001 | 16.5% | 96 |
| 2002 | 13.5% | 115 |
| 2003 | 13.5% | 116 |
| 2004 | 13.5% | 165 |
| 2005 | 12% | 169 |
| 2006 | 12% | 199 |
| 2007 | 12% | 254 |
| 2008 | 11% | 266 |
| 2009 | 11% | No data |
| 2010 | 10.5% | |
| 2011 | 10% | |
| 2012 | 10% | |
| 39% Decline | Increased by over 430% |
What do we learn here?
From less than 50 in 1999 to 266 in 2008, we see a more than fivefold increase in the number of corporations paying no tax. While their taxes will decline by 39% from 1999 to 2011, that drop does not cause the increase in the number of corporations paying no tax since there are many variables that lead to tax freedom. But, gosh, does it sure correlate strongly in describing a defunding tax regime.
Small Businesses Paying No Taxes
Here is the 10-year small business breakdown of “corporations with a permanent establishment in BC that filed tax returns and paid no BC Corporate Income Tax”:
| Year | Small Business Revenue Ceiling |
Small Business Tax Rate |
Number of Small Businesses with under $300k in Revenue Paying No Tax |
Number of Small Businesses with $300-400k in Revenue Paying No Tax |
Number of Small Businesses with $400-500k in Revenue Paying No Tax |
| 1999 | 8.5% | 135,165 | <50 | <50 | |
| 2000 | 4.75% | 125,450 | <50 | <50 | |
| 2001 | 4.5% | 134,820 | <50 | <50 | |
| 2002 | $300,000 | 4.5% | 137,246 | <50 | <50 |
| 2003 | $300,000 | 4.5% | 144,400 | 53 | <50 |
| 2004 | $300,000 | 4.5% | 145,424 | <50 | <50 |
| 2005 | $400,000 | 4.5% | 147,852 | 68 | <50 |
| 2006 | $400,000 | 4.5% | 147,295 | 98 | <50 |
| 2007 | $400,000 | 4.5% | 152,826 | 147 | 51 |
| 2008 | $400,000 | 2.5% | 140,947 | 133 | 67 |
| 2009 | $400,000 | 2.5% | No data | No data | No data |
| 2010 | $500,000 | 2.5% | |||
| 2011 | $500,000 | 2.5% | |||
| 2012 | $500,000 | 0% | All of them |
All of them |
All of them |
| 100% Decline | Increased by over 160% | Increased by over 33% |
What do we learn here?
We learn that the backdoor tax cut in 2005 when the government increased the small business ceiling from $300,000 to $400,000 meant a great deal of businesses dropped from a 12% tax rate to a 4.5% tax rate that year, which while not causing the rise in the number of corporations paying no tax, it reinforced the defunding priority.
Not only will corporations with revenues below the new $500,000 small business ceiling pay no income taxes in BC in 14 months, but larger businesses will pay no taxes on the first half million in revenue. Look out, Cayman Islands!
But in 2012 it will be clear that a 0% tax rate will then actually cause all businesses earning less than half a million dollars to pay no taxes.
Sitting through Gordon Campbell’s condescending TV address last night was a flashback to the idiotic campaigning they did to get elected in 2001: tax cuts along with service improvements. That’s inherently contradictory, but people bought it. And they’ve bought it twice more this decade despite the carnage the BC Liberals have visited upon us all. How can we be so foolish? It’s because “we” have been socialized into this way of crazy thinking. How else would we explain why people vote for tax cuts when anyone who can balance their own chequebook can see that a decline in income leads to a decline in spending.
But we also learn that well over 100,000 businesses pay no tax. In discussing this very high number with a BC Finance Ministry official, it became clear that many of these are businesses set up that are designed to earn no money to be write-offs for people, so the sheer size and flux in that number is of little significance for my purposes here.
Individuals Paying No Taxes
“Individuals who filed a BC tax return and paid no BC Personal Income Tax.”
| Year | Tax Cut | Number of Individuals under $100k in Income Paying No Tax |
Number of Individuals with $100-200k in Income Paying No Tax |
Number of Individuals with over $200k in Income Paying No Tax |
| 1999 | 952,756 | 92 | 58 | |
| 2000 | 993,427 | 128 | 58 | |
| 2001 | 25% | 1,070,020 | 139 | 56 |
| 2002 | 1,130,013 | 201 | 65 | |
| 2003 | 1,144,123 | 269 | 97 | |
| 2004 | 1,148,479 | 280 | 68 | |
| 2005 | 1,398,577 | 325 | 74 | |
| 2006 | 1,380,328 | 491 | 124 | |
| 2007 | 10% | 1,360,101 | 690 | 176 |
| 2008 | 5% | 1,414,854 | 776 | 169 |
| 2009 | No data | No data | No data | |
| 2010 | ||||
| 2011 | 15% | |||
| Increased by almost 50% | Increased by over 740% | Increased by over 190% |
What do we learn here?
We learn that it’s harder to criticize the government for massive tax cuts for the rich and for corporations when they increase the number of poor people who pay no taxes, which is what the 3rd column describes. Shockingly, this is even true in a province where the government has chosen to not increase the minimum wage in over 10 years.
We also know that massive tax cuts have been matched with clawbacks through MSP increases and a decline in services for the poor, so in the end, there is no real gain for those in poverty.
So if you’re fine with corporations paying no income tax, for whatever reason, you ought to be quite thrilled right about now, even more so in 2012. But if these facts disturb you, it’s time to find ways of changing the culture shift that has brainwashed enough people so that the premier can feel confident getting on TV when his approval rating is 9%, then pander to these core instincts with tax cut rhetoric as if it were 2001 again and people have forgotten the real cost of tax cuts.
If you would like the raw spreadsheet file with all these numbers, just email me and I’ll send it along.
More from my site
April 19, 2011 Politics, Re-Spun on Coop Radio, April 18, 2011
April 18, 2011 Embracing BC NDP Corporate Tax Increases
December 23, 2010 Tax Cuts Are To Blame for Cities’ Bankruptcy Risks
November 6, 2010 National Post’s Medicare “Crisis” Editorial Ignores Tax Cut Trigger
November 2, 2010 Harper is Testing A New Tax Cut Ad Campaign: Boo!- October 5, 2010 Corporations Already Pay Virtually No Tax in BC
Stephen Elliott-Buckley
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When taxes increase in an area, the money leaves that area, it is as simple as that.
We should be striving for NO taxes, and I suggest you move to Cuba where they will take all of your money, especially if you cannot and will not compete in a free enterprise economy.
ok, i see where you’re coming from on the no taxes thing. i don’t agree.
when i pay taxes, which i do gladly, our elected representatives spend it as wisely as they can. i don’t happen to agree with the priorities of the politicians we’ve elected. that, i’m not so glad about.
for every dollar in provincial tax i pay, most of it stays in bc. it comes back to other citizens in wages to teachers, firefighters, seniors facility care aides who care for our elderly.
those people buy groceries [hopefully from local farmers], pay for their kids soccer team fees, pay rent, and support the [hopefully] mom and pop coffee shop, so the profits don’t go to global Starbucks’ shareholders…out of the country, thereby leaving the area.
bc property taxes fund education. the money is pooled provincially so that every student theoretically gets funded the same way because of the universality principle that education is a human right and all should get equal access to it regardless of the wealth of their community. children lucky enough to be randomly born to parents in Lion’s Bay deserve the same quality education as children who happen to be born to parents still left in Mackenzie, BC where there was recently at 70% unemployment rate.
if you don’t agree with universality, there are lots of places in the world that won’t tax you at all, so that those with cash are free to buy whatever education level for their kids they choose. and the poor stay uneducated.
the same goes for healthcare, which is also a human right.
i’m fighting to keep canada from becoming that place.
I suggest that you should move instead Mr Kennedy. Most Canadians realize that taxes are necessary to pay for schools and fire depts, policing, medical care. Etc.
Without all those things, it is pretty much a third world. Do you want Canada to turn into that? Honestly?
Perhaps Somalia would be a great place for you. It is a Libertarian paradise after all.
or less extremely, google “Sandy Springs, Georgia Naomi Klein” to read about the privatized mecca down south.
or more broadly, he could just move to america, where lots of that is already going on.
or perhaps Celebration, Florida: http://en.wikipedia.org/wiki/Celebration,_Florida
To some extent David Kennedy is right about when taxes are raised money flees to tax havens. But this is a situation created by the Canadian government itself and is not irreversible.
The simple solution is to get tough on the rich and corporate tax evaders who do business here but hide their true income by using tax havens.
A recent whistle-blower from UBS Bank in Switzerland went to the US government with information on billions of dollars of tax cheating criminals from the US were doing business with his bank. The US in turn found that UBS was also stashing about $6 billion in Canadian funds, most of it related to tax evasion.
The Canadian government is doing almost nothing to investigate this type of criminal tax evasion.
And this is just one bank. Imagine what the government would find if it cracked down on tax frauds seriously. We would probably bring in tens of billions into the treasury. And this is without even raising taxes, just enforcing the tax laws on the books and cracking down on tax havens.
preventable capital flight of tax dollars:
– tax cuts to the rich, who like to travel international and buy expensive imports, like the brand new 15% tax cut, again mostly to the rich, to take place in 9 weeks; this will cost almost $600m in the first year when BC’s health authorities were robbed of $360m in funding 15 months ago.
– paying public debt held by external creditors, as opposed to us [via the Bank of Canada]
– TILMA, US procurement deals, and the new CETA which will force government procurement to stop buying locally, thereby triggering economic multiplier effects domestically
i read about the UBS guy. awesome! BC needs some whistleblower protection legislation…oh wait, never mind. 🙂
Question? Is it possible to get a list of names of corperations who did not pay tax, both provincial and or federal?
I really would like to put a face on who these folks are.