Eliminating the homeowner grant, taxing sugary drinks, and changing the Provincial Sales Tax to a value-added tax are just some of the ways the province can recoup revenue from eliminating Medical Service Plan premiums, according to a report sent to government this week.
The recommendations are contained in the MSP Task Force’s final report. The province has promised to eliminate MSP premiums on January 1, 2020.
“I’d like to thank the MSP Task Force members for their time and expertise. The task force has provided a comprehensive report with a number of policy recommendations,” said Carole James, Minister of Finance. “We appreciate their analysis as we continue our work to make life better for people in B.C.”
She, however, was non-committal on recommendations such as removing the homeowner grant and changing the PST.
“The Home Owner Grant is a regressive feature of the tax system that is also fundamentally unfair and would be improved by using the income system to provide more progressive tax relief to homeowners and renters,” reads the task force report.
The task force recommends creating a combined refundable tax credit with the following features:
- An enhanced Sales Tax Credit funded by the PST levied on non-alcoholic beverages;
- The existing B.C. Climate Action Tax Credit, which the province has committed to enhance as the Carbon Tax rate increases;
- New homeowner and renter tax credits providing a fixed amount that would be phased out for household income above a defined threshold (for example, a credit of $750 per year plus $275 for those with disabilities or living with a person with disabilities phased-out for those with family incomes in excess of $100,000 would be revenue-neutral);
The task force recommends that the province increase the B.C. Tax Reduction Credit consistent with the increases in minimum wage over the period to 2021 and ensure that increases in this tax credit are tied to increases in the minimum wage.
The task force recommends that, given concerns about B.C.’s relative business competitiveness, consideration be given to PST reform directed toward increasing competitiveness by at least reducing the impact of the tax on machinery and equipment or all capital spending; and, if possible moving to a value-added tax, after a comprehensive public consultation.
James said the province has acted, in part, on some of the recommendations in the report. For example, the government has appointed a Parliamentary Secretary for Gender Equity, Mitzi Dean. Her role is to make sure gender equity is reflected in budgets, policies and programs.
In addition, the government has taken action to improve tax compliance. The Budget 2017 Update made changes to allow the Canada Revenue Agency to access homeowner grant and assessment data. Legislative amendments introduced this spring will require real estate developers to collect and report information on pre-sale condo assignments.
All of these changes will give tax authorities and law enforcement agencies access to new information to crack down on tax evasion and tax fraud, James said.