Report: Potential Boost of up to $1,700 in Workers’ Annual Income from BC Provincial Tax Reform
According to a recently released study, reforms to British Columbia’s provincial sales tax have the potential to boost workers’ annual earnings by up to $1,700.
The Fraser Institute’s report suggests that by replacing the provincial sales tax (PST) with a harmonized sales tax (HST) that combines provincial and federal taxes, the province could see an increase in workers’ average hourly earnings ranging from $700 to $1,700, thus encouraging investment in British Columbia.
Author and Fraser Institute senior fellow Bev Dahlby highlighted how the current PST adversely impacts business competitiveness and investment, distorting consumer choices and burdening firms with compliance complexities.
British Columbia’s current PST rate is 7 percent, making sales taxes the government’s second-largest revenue source after personal income tax, as per the 2024 provincial budget.
The study reveals that eliminating the PST could decrease the aggregate marginal effective tax rate (METR) from 25.6 to 16.2 percent, making British Columbia more appealing for investment and boosting labour productivity, economic growth, and ultimately, workers’ earnings.
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