Enough is Enough When it Comes to High Taxes
This article first appeared in the January 28th, 2016 edition of the Telegraph-Journal.
If you’ve been noticing your wallet getting a little lighter, you’re not alone. Canadians across the country are feeling the pinch thanks to a weakening Canadian dollar and a troubled world economy. Even discount stores like Dollarama are raising their top prices from $3 to $4 in 2016.
Everything from food, to clothing, to entertainment is costing more in New Brunswick. But the world economy and the dollar are not the only reasons; the provincial government is playing its part too. Provincial tax hikes have been creeping up on almost an annual basis.
In the last five years, gas taxes have increased twice, income taxes have been raised by the largest amount in the past 30 years and just about every fee has gone up. In spring 2016, birth certificates and death certificates will see an increase – squeezing a bit extra from you’re born and when you die.
This could be just the beginning of more tax increases. The government says in their “Choices” pre-budget consultation document that they are also considering putting up new road tolls, tax hikes on companies, increasing the diesel tax, raising the insurance premium tax, and increasing the tax when you sell your home and car. In addition, the premier says he’s considering a carbon tax in the future that would hike taxes paid on everything from gas for your car to the oil that heats your home.
But the tax increase the government is considering that would sting the most is hiking the HST from 13 per cent to 15 per cent next year. It would raise the price of just about everything you buy.
New Brunswick is not the first province to go through a debate on the HST. Six years ago, neighbouring Nova Scotia went through a similar process. They too held a series of consultations much like Minister Victor Boudreau has done, eventually leading to then Nova Scotia Finance Minister Graham Steele raising the HST from 13 to 15 per cent.
But look at where that province is now.
Six years after the HST was raised to balance the budget, the Nova Scotia budget remains in deficit and it has been in deficit for every budget since the tax increase. The government says they will try to balance the budget by 2017-18, taking at least another two years.
One of the causes of these deficits is that politicians just could not help snapping up the extra revenue the HST hike created. Take this one example: Just before the 2013 election campaign, the province’s unions were demanding higher pay. At first the government resisted, but the politics of going into an election fighting with its unions scared them. As a result, they gave the unions 7.5 per cent pay increases over three years. A big pay increase considering real economic growth in Nova Scotia during that period stood at just 1.6 per cent.
The Nova Scotia government says for every 1 per cent increase in union wages costs $52 million, meaning this contract effectively eats up all of the $300 million raised through the HST hike.
Herein lies the problem with hiking the HST.
Taxpayers in New Brunswick are dealing with difficult times, rising costs, and a troubling economy. Let’s not add to that burden by raising the HST now, only to watch politicians spend that money on their pet projects as it gets close to an election.
An HST hike will also have economic consequences. It means less money in the pockets of New Brunswickers to spend and generate economic activity. Less economic activity will also have an impact on the revenue targets of the government.
Rather than raising taxes to balance the budget, the CTF has suggested government cut its costs. The CTF supports ending taxpayer hand-outs to corporations, reducing the size of the provincial government and ending special tax deals for aboriginal bands.
A strong New Brunswick needs low taxes that attract business, less government, balanced books and a diverse economy that has good quality, well paying jobs for New Brunswickers to take advantage of.
Let’s hope the government delivers on that in their Feb 2nd budget.