As Nova Scotians prepare to make their New Year’s Eve plans, the Canadian Taxpayers Federation (CTF) has crunched the numbers the numbers in its annual New Years Tax Changes report, and it turns out we’ll all be paying more tax in 2014. 

 

A Nova Scotian family with two kids and a single income earner of $60,000 will pay $122 more in extra taxes than they did in 2013.

 

There are two reasons for the tax increases.

 

“Sneaky” Tax Increases

 

Nova Scotia is one of just three provinces (Manitoba and PEI) that do not index their tax brackets for inflation, which means virtually every single Nova Scotian will see a “sneaky tax” thanks to “bracket creep”.

 

Nova Scotia Premier Stephen McNeil committed to ending “bracket creep” while in opposition but has shown no signs of keeping that promise since coming to power.

 

“These sneaky and dishonest tax increases take a bite out of your wallet each and every year. Mr. McNeil was right when he called for these tax increases to end while in opposition; it’s time for him to do something about them now that he has the power to change it,” said CTF’s Atlantic Canada Director, Kevin Lacey.

 

The federal government started indexing its tax rates for inflation in 2000 – fourteen years ago. Most of the other provinces followed suit and adopted the taxpayer fairness initiative but Nova Scotia, PEI and Manitoba still have not.

 

“The provincial government is getting away with a sneaky tax increase each and every year because they refuse to account for inflation in wages,” continued Lacey.   

 

Other tax increases for Nova Scotians this year result from hikes in EI/CPP payroll contributions.

 

EI/CPP Taxes

 

The CTF has calculated that maximum employee EI taxes will go up $23 in 2014 to $914, while the employer’s share of EI payroll tax goes up $31 to $1,279. That means a working couple who each earns at least $48,600 in 2014, will have $4,386 in EI payroll taxes sent to Ottawa on their behalf.

 

The federal government expects to collect $4.2 billion more in EI taxes in 2014 than they pay out in benefits. Other forecasts peg the EI tax windfall to the government much higher.

 

“People have compared the government’s EI game to a casino where the house takes a huge cut of the money,” said CTF Federal Director Gregory Thomas. “It’s completely unfair to compare EI to a casino, because you occasionally win when you give your money to a casino.”

 

Thomas noted that for every dollar paid out in EI benefits, the government spends 11 cents on administration.

 

The maximum employee Canada Pension Plan payroll tax rises $70 to $2,426 for employees earning at least $52,500 a year. Employers match employees’ CPP payroll taxes dollar for dollar, pushing the total CPP payroll tax haul to $4,856.

 

High Tax Nova Scotia vs. Canada

 

Nova Scotia has the second highest income taxes, highest sales taxes and highest total taxes for the size of our economy.

 

Despite New Brunswick introducing the largest tax increases in the past 30 years in 2013, a single earning family with two kids $60,000 will still pay $671 more income taxes in Nova Scotia.

 

At that same Nova Scotia family will pay $3,359 more than same family in Alberta and $1,221 more than the national average.

 

In 2012-13, according to Statistics Canada, 4,915 Nova Scotians packed up and moved to lower tax Alberta.

 

“People are voting with their feet, they’re leaving high tax Nova Scotia for lower tax Alberta,” adds Lacey. “How can we ever build a strong, local economy in Nova Scotia if working taxpayers are all living in Fort McMurray”.

 

You can view the CTF’s calculations for 26 different family and income scenarios here:http://www.taxpayer.com/media/2014_New_Years_Tax_Changes_Backgrounder.pdf