As the provincial election heats up, New Brunswick’s political parties are again circling around on the question of whether to hike taxes, when they should be talking about how to hike the economy.

 

This back and forth on taxes has been going on since 2010 when the Alward Conservatives were newly elected and their first look at the books revealed a fiscal situation far worse than they had anticipated.

 

For almost three years, they waffled on what to do, deciding to hold the line on income taxes and the HST, while hiking user fees and gas taxes. Finally in the 2013 budget, they gave into lobbying from groups like the New Brunswick Businesses Council (NBBC) and big labour unions and increased income taxes by $136 million.

 

One big tax hike should be enough, right?

 

Well apparently not. One year later, the NBBC doesn’t think the $136 million tax hike was enough. They want taxes hiked on working New Brunswickers again – this time in the form of a two point increase in the HST – from 13 to 15 per cent. This will cost taxpayers another $280 million.

 

If you think another big tax increase so soon after the last one is far-fetched, think again. The Conservative government has already cleared the way for a tax increase by gutting the Taxpayer Protection Act, which had required the government to go to the people and hold a referendum to increase the sales tax. The new law says a referendum is not necessary if the province is running a deficit of $400 million or more. There was no opposition from Liberals against this move. Heading into the election, the deficit sits at $387 million nearly enough to skirt the Taxpayer Protection Act.

 

For their own part the opposition Liberals want to hike taxes on incomes of $150,000 or more. This policy sends a clear message that if you work hard, become successful in New Brunswick then the NB Liberal Party wants to punish you through the tax system.

 

All that raising taxes will do is ensure that the government stays fat and the economy remains lean. We cannot tax our way out of the economic problems New Brunswick faces. This is not just a theory. Recent history in New Brunswick proves the point.

 

In 2013, after taxes were raised, the government’s deficit came in higher than projected while tax revenues came in lower than projected. Why? Because these tax increases killed job growth and dragged down the economy.

 

The NBBC points to Nova Scotia’s “temporary” HST increase in support of the move.

 

Although the tax increase in Nova Scotia was intended to be temporary, four years hence, there is no sign of it being repealed. Despite HST and income tax increases in 2010, Nova Scotia’s financial position has not improved.

 

A recent economic statement by Nova Scotia’s Finance Minister showed that instead of the balanced budget that was projected for 2013-14, the province ran a $680 million deficit. In 2010, before tax sales and income hikes fully came into effect, the deficit was $241.9 million.

 

The current state the books resulted in the governing Nova Scotia Liberals canceling a promised 1 point reduction in the HST this summer. They will not say when, if ever, the “temporary” HST increase will go back to where it was.

 

Instead of this back and forth about taxation it’s time for our leaders to step up, commit to not raising taxes and instead debate how they will get the New Brunswick economy moving again. New Brunswick’s path to success is determined not by how much we can tax, but by how much we can grow.

 

The next time a campaigning politician comes to your door, tell them to not raise your taxes and instead to make a plan for growth. Now is our best chance.

 

 Kevin Lacey, Atlantic Director Canadian Taxpayers Federation, you can find more information at taxpayer.com