Greater Vancouver seventh place in economic ranking, up two places since 2016

High tax rates and unaffordable housing still a strain for Greater Vancouver region, according to report.

Thestar.com
May 10, 2018
Jenny Peng

Following the release of an economic ranking report Thursday by the Greater Vancouver Board of Trade, the board is sounding the alarm on “dangerously high” tax rates.

The 2018 scorecard, produced with the Conference Board of Canada economic report, ranked Greater Vancouver as seventh among 20 regions worldwide — up two places since its original release in 2016. The ranking is based on 22 economic indicators such as employment growth and labour productivity, and 16 social measurements analyzing air quality and commuting time.

In Canada, Calgary placed second and Toronto is ahead of Greater Vancouver in sixth. Other metropolitan regions analyzed in the report include Singapore in first place, Seattle in third, followed by San Francisco in fourth and Copenhagen in fifth.

Iain Black, president of the Greater Vancouver Board of Trade, said the two challenge areas that are especially concerning are housing unaffordability — something that the original 2016 scorecard report highlighted — and the high tax rates straining businesses. Black said the board is not advocating for “aggressive tax cuts” but wants “tax relief” for businesses to ensure they keep investing.

The report ranks regions based on the marginal effective tax rate (METR), which measures the rate of return from a new investment that requires investors to pay capital-related taxes. A lower METR means a higher return on investments. The new report incorporates the impact of the 2018 U.S. tax reform, which puts Greater Vancouver at a “significant competitive disadvantage,” according to the report.

“I don’t think it’s reasonable to chase the American tax cuts that are being proposed by President Trump,” Black said. “It’s not realistic because we don’t want our governments to be in massive deficits either.”

Black added that capital write offs for large equipment, for instance, would make it more attractive for businesses to make those investments.

“They’re using this report as a way to pressure the government for lowering taxes,” said Steve Mongrain, economics professor at Simon Fraser University.

B.C.’s tax rate is better than regions like Montreal and Halifax, Mongrain said, but compared to the U.S. it could potentially do better. Changing the tax system, he added, by shifting taxes away from businesses, could put more of the burden on individuals such as taxes on personal income since governments will have less revenue.

Black points to Alberta, which doesn’t have a provincial sales tax, and Ontario’s harmonized sales tax as noteworthy examples for B.C.