Why is BC’s business sector so small?
Despite all the arguments outlined on this blog, and the federal election debates, the race to the bottom in corporate taxation seems to be alive and well in the G-7. The latest move comes from the UK, whose March budget announced a new 2 percentage point reduction in their corporate tax rate.
Meanwhile, Canadian provinces have their own corporate tax race to the bottom, with BC Finance Minister Kevin Falcon proudly pointing to the fact that BC now has the lowest provincial corporate tax rate in Canada whatever chance he gets (most recently, while speaking to reporters about the federal budget).
If BC’s tax regime is so competitive, then why does BC account for only 7% of the total corporate taxable income in Canada? In comparison,Â Ontario, Quebec and Alberta are reported to account forÂ 80 per cent of the corporate taxable income in the country.Â These statistics are attributed to Prof. Jack Mintz in this Globe and Mail article though I’m sure that Statistics Canada data is available to back them up.
BC is home to 13% of Canada’s population, and about 13% of Canada’s GDP. Why do we only have 7% of the total corporate taxable income?
Jack Mintz’ explanation:Â â€œB.C. has a relatively small business sector,â€ he said. â€œThey got a lot of retired people instead.â€
What a slap in the face for our current BC Liberal provincial government after a decade of cutting taxes that were supposed to make the investment environment in BC more competitive.