The Canadian Taxpayers Federation (CTF) released its annual report crunching the numbers on the new year’s tax changes for Canadians.
Many Canadians will only see minor changes to their tax bill, but thanks to the Medical Services Premium (MSP) cut, British Columbians will see some of the largest beneficiaries on Jan. 1.
The MSP was sliced in half on Jan. 1, 2018.
This move saves an average two adult home $900 per year in mandatory health-care taxes. The NDP provincial government has promised to eliminate the MSP completely within their four-year mandate.
“The CTF campaigned hard for a cut to MSP, so we’re very pleased this unfair tax will be halved on Jan. 1,” says the CTF’s B.C. director, Kris Sims.
“With housing and fuel continuing to be less and less affordable in B.C., this significant tax relief is most welcome.”
There is some bad news coming later in the year, however, which will eat into the MSP tax savings. B.C.’s carbon tax will jump to $35 per ton in April, making it the highest carbon tax in Canada.
That means the carbon tax price at the pumps will go up to about 8.5 cents per litre of gasoline and more than 10 cents for diesel.
That means it will cost consumers more than $5 extra in carbon tax every time they fill up and nearly $10 tacked on if you drive an SUV.
The carbon tax is also applied to natural gas and home heating oil.
Starting this year, the B.C. carbon tax will no longer be labelled as “revenue neutral” and the money will pour into government coffers without earmarks or tracking as to where it’s spent (AKA slush fund).
With more than 5.7 billion litres of gasoline sold in B.C. last year that means the provincial government will rake in an average of $490 million in gasoline carbon tax, and when the diesel carbon tax is included, that jumps to more than $600 million in tax revenue taken from motorists in one year.
“The carbon tax is going to cost us even more and now we have no idea where it’s going,” Sims explains.
“If you have two vehicles in your family, this means the carbon tax now costs you about $360 per year just to drive your kids to school and get yourself to work and the grocery store. This doesn’t include the costs of all those goods that need to be trucked in. We will pay for that, too.”
Federally, Employment Insurance (EI) premiums will rise slightly, costing employees and employers an additional $9 and $13 per year, respectively.
The indexation of the Canada Child Benefit (CCB) will also come into force on July 1, 2018, leading to a slight decrease in payments to eligible families on Jan. 1.
“There are no dramatic income tax changes on the federal side,” says CTF federal director Aaron Wudrick.
“Canadians can for the most part breathe easy, but they shouldn’t expect to have much more money in their pockets.”
Wudrick notes that while 2018 did not hold many large tax changes, Canadians can expect further changes in 2019.
“The Trudeau government has delayed imposing its national carbon tax until 2019, and Canada Pension Plan premiums will begin to rise annually as well.
“There is still considerable uncertainty on the business tax front, both with respect to the Trudeau government’s controversial small business tax proposals, and due to recent dramatic tax cuts south of the border, which will impact Canada’s competitiveness.”