OPINION: Since Premier Horgan’s NDP took office, the marginal top bracket tax rate has increased 39.5 per cent from 14.7 per cent to 20.5 per cent.

We are both deeply committed to building British Columbia’s economy, having had the privilege of founding two of Canada’s largest innovative biotechnology companies, both based in B.C. Our companies employ roughly 400 people, many of whom are highly paid scientists. Our companies have raised and brought into B.C. almost $1 billion of foreign capital in the past year alone, enabling our dedicated researchers in this province to develop pipelines of exciting new drugs for treating cancer and childhood epilepsy.

We are but two corporate examples of a burgeoning biotechnology business, an innovative industry segment that is adding balance to a fickle and environmentally draining resource base that has been ever dependent on global geopolitical winds.

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It was therefore a bitter disappointment to see the NDP provincial government’s recent budget. Premier Horgan’s government has decided to add taxes on an already overtaxed higher income bracket in order to create a marginal provincial surplus, with little money spent on new initiatives that could uplift those most in need.

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We fully recognize that “taxing the rich“ may be a needed mechanism to generate government revenue to support social services. We also see the political advantage of doing so. However, the announced budget and the extent of taxation across personal income and capital gains was at best a myopic and lazy grab at the lowest hanging fruit. The consequences and alternatives were poorly considered, if at all.

Consider for a moment that many businesses in this province are founded and run by management teams who cross this top income bracket and whose capital gains are an important source of income. These are individuals who in most cases do not have company pensions, who employ hundreds of thousands of British Columbians and who take enormous financial risk in doing so. These individuals contribute heavily to our economy daily. These individuals have choices on where to live and where to run their businesses. Keeping them incentivized to remain in this province is not only important, but is critical to the future health of our region.

Both of our companies have, over the past few years, set up U.S. subsidiaries to ensure we remain globally competitive. The hard truth is that we are simply unable to recruit senior talent into B.C. anymore given the already high cost of living and levels of taxation. Both of our companies expect to hire more employees this year in the U.S. than in B.C. The recent budget announcement pours a highly flammable mix onto this fire.

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Since Premier Horgan’s NDP took office, the marginal top bracket tax rate has increased 39.5 per cent from 14.7 per cent to 20.5 per cent. Federally, the top bracket has gone from 29 per cent to 33 per cent (a 13.8 per cent increase) in a similar time frame. Finance Minister Carol James said after the announcement: “We’re asking those at the top, who benefit most from our economy, to contribute a little bit more.” This is a shockingly misleading comment. Minister James omits to mention that those at the top also contribute most to our economy and in fact, keep it afloat.

What’s most disappointing in the 2020 budget was that so little thought appears to have been given to alternate sources of taxation. There’s no perfect system and there will always be opposing sides on any taxation scheme, but isn’t it time we consider serious taxation on the items that contribute so massively to our single biggest provincial expense, healthcare? Isn’t it time to implement more meaningful taxation of high sugar foods and drinks, tobacco and cannabis. Let’s charge as much as we can for the drivers of government expenditure, such as health.

As Bruce Ralston, when he was B.C.’s minister of Jobs, Trade and Technology, previously said: “From a two-person startup, to large established tech firms and traditional resource industries, innovation can deliver a wealth of benefits to people, companies and our provincial economy. It is about creating good jobs for people in every corner of the province.”

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Sadly, Budget 2020 does nothing but create doubt and add significant risk to the competitiveness of B.C. as a centre for innovation. Attracting talent has become that much harder and it is our belief that the B.C. government has unfortunately taken the path to nowhere.

Simon Pimstone, MD, PhD, FRCPC, is founder and CEO of Xenon Pharmaceuticals Inc. Ali Tehrani, PhD, is founder, president and CEO of Zymeworks Inc.

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