Oct 2, 2010

Which is more important, lower taxes or a higher minimum wage?


BC Labour Minister Murray Coell apparently got taken to the woodshed this week after telling a forum at the Union of BC Municipalities that his government was considering raising the minimum wage.

The next day he quickly called a press conference on the driveway of a Whistler hotel to “clarify” his remarks.  He really just meant to say the government would consider raising Canada’s lowest minimum wage “in the future.”

 While other provinces (actually all other provinces) had raised their minimum wages in the last 10 years, he said, BC had helped low income people by reducing their income taxes. Some people would argue this is really more of a subsidy for business, but that is another issue.

So how does after tax income for minimum wage workers in BC compare to after tax income for minimum wage workers in the other nine provinces?  The following table looks at total income taxes, both federal and provincial.  Since federal income tax in every province is the same, the difference reflects provincial income taxes.  The following table assumes someone is working 35 hours a week for 52 weeks a year.

  Minimum Wage Annual earnings After tax earnings
BC $8.00 $14,560 $13,933
Alta $8.80 $16,016 $14,918
Sask $9.25 $16,835 $15,485
Man $9.50 $17,290 $15,266
Ont $10.25 $18,655 $16,924
PQ $9.50 $17,290 $15,337
NB $9.00 $16,380 $14,774
NS $9.65 $17,563 $15,667
PEI $9.00 $16,380 $14,632
Nfld $10.00 $18,200 $16,230


It turns out that the level of the minimum wage is way more important than the level of taxation.  Before or after taxes, minimum wage workers in BC take home less than anyone else in the country.  And of course, BC is the most expensive place to live. 

Sorry Minister Coell, your after tax argument just doesn’t hold water. 

Note: I obtained the income tax information from this website.

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