Equity Comparison Between Alberta & British Columbia On

8/2/2019 Equity Comparison Between Alberta & British Columbia On

1/21

4/10/12

Click to edit Master subtitle style

Equity comparison between

alberta & british columbia on thebasis of personal income taxsystems


2/21

4/10/12

Why is this issue important?

It affects the economic well-

being of the residents (tax-payers) of both provinces.


3/21

4/10/12

Issues being addressed

Is Progressive tax system fairer than proportionaltax system?

Which tax system promotes better equity(vertical and horizontal)?

Which tax system reduces income inequalities?


4/21

4/10/12

hypothesis

Progressive tax system in BC leads tobetter equity as compared to the

proportionate tax system in Alberta


5/21

4/10/12

Population - 3,779,400

GDP - C$178.225 billion

GDP per capita - C$49,563

Unemployment rate 5.4%(Sept 2011)

Minimum Wage

September 2011 9.40/hour

Main industries Oil and Gas,Petrochemicals, Agriculture,Food and Beverages, Tourism,Industry Machinery andEquipment

Population - 4,400,057

GDP - C$191.006 billion

GDP per capita - C$41,689

Unemployment rate 6.9%(Feb 2012)

Minimum Wage

May 1, 2011 $8.75/hour;

November 1, 2011 $9.50/hour;

May 1, 2012 $10.25/hour

Main industries Forestry,Mining, Fisheries, Agriculture,Energy and transportation

Few Facts about the provinces

BritishColumbia

Alberta


6/21

4/10/12

Proportional tax system is asystem in which the

proportion of income paid intaxes is the same for allincome levels.

Rich pay more Poor paymore

Revenues vary according tothe income

Promotes horizontal equityonly

Progressive tax systemlevies taxes according to the

individuals income

Rich pay more Poor payless

Stable income stream for the

government Promotes horizontal and

vertical equity

Tax systems

Progressive TaxSystem

Proportional TaxSystem


7/21

4/10/12

2012 TaxableIncome

2012 Tax

Rates

first $37,013 5.06%

over $37,013 upto $74,028

7.70%

over $74,028 upto $84,993

10.50%

over $84,993 upto $103,205

12.29%

over $103,205 14.70%

Tax brackets

British Columbia Alberta

2012 TaxableIncome

2012 Tax Rates

Total taxableincome

10%


8/21

4/10/12

Hey, wait a minute..!!


9/21

4/10/12

Fact BC has the highestincome inequality in canada


10/21

4/10/12

Methodology for analysis

Comparison of Gini coefficients forMarket Income, Total Income and Aftertax income to identify income

inequalities between BC and Alberta Market Income - Total income before tax minus

income from government sources.

Total Income - Total income refers to income from all

sources including government transfers and beforededuction of federal and provincial income taxes.

After-tax Income - After-tax income is total income,which includes government transfers, less incometax.


11/21

4/10/12

GINI coefficient

The Gini coefficient is anumber between zero andone that measures therelative degree of inequalityin the distribution of income.

The coefficient would

register zero (minimuminequality) and it wouldregister a coefficient of one(maximum inequality).

To calculate the Ginicoefficient, you divide the

orange area (A) by the sumof the orange and blue areas(A + B).


12/21

4/10/12

Income inequality in canada is on rise

Statistics Canada. Table 202-0705 - Gini coefficients of market, total and after-tax income, byeconomic family type, annual (number)


13/21

4/10/12

Gini coefficients for market income



14/21

4/10/12

Gini coefficients for total income



15/21

4/10/12

Gini coefficients for after-tax income

Statistics Canada. Table 202-0705 - Gini coefficients of market, total and after-tax income, by

economic family type, annual (number)


16/21

4/10/12

Reasons explaining inequality

1. Low Wages A particular job in Alberta pays you more ascompared to the same job in BC.

2. Low Tax Credits as compared to Alberta

Source LivinginCanadaWebsite


17/21

4/10/12

PROVINCIAL COMPARISON - AVERAGEWEEKLY WAGE RATE


18/21

4/10/12

Non-refundable Tax credits

2012 Tax Credits (indollars)

British Columbia Alberta

Basic personal amount 11,354 17,282

Spousal amount 9,964 17,282

Infirm dependent amount(18+)

4,250 10,004

Disability amount 7,285 13,331

Caregiver amount 4,250 10,004

Pension income amount 1,000 1,331

Medical expense 2,020 2,233Education part time permonth

60 202

Education full time permonth

200 672

Age amount 4,356 4,816


19/21

4/10/12

What can help?

What should alberta do?

Increase the minimum wage -

Public Interest Alberta discussed

under the living wage campaign that

a living wage would be much more

than $12/hour

Start progressive tax system


20/21

4/10/12

What can help?

What should BC do?

Increase the tax credits so that more money can stay in poorpersons pocket.

Increase the marginal tax rates for higher income brackets.

Demolish PST.


21/21

4/10/12

Questions?

Equity Comparison Between Alberta & British Columbia On

Documents