Newfoundland and Labrador budget: lots of spending, no savings
- New spending initiatives announced in budget 2021-22 total $121 million.
The Canadian Taxpayers Federation condemned the government of Newfoundland and Labrador’s big-spending approach in budget 2021-22.
“Based on this budget, it would seem like the coffers were overflowing at Confederation Building,” said CTF Interim Atlantic Director Renaud Brossard. “From subsidies for electric cars to millions of dollars for the Canada Summer Games, it seems like Finance Minister Siobhán Coady’s motto this year was ‘spend, spend, spend!’”
The government announced a new $2,500 subsidy on the purchase on electric vehicles, as well as $3 million in funding for the 2025 Canada Summer Games in St. John’s, amongst $121-million in new spending announcements.
Meanwhile, the government announced a tax increases of up to 3.5 percentage points on annual incomes over $136,000. In the last five years, an estimated 8,000 Newfoundlanders and Labradorians left the province to move elsewhere in the country.
“The government’s personal income tax hikes will do little to solve the province’s financial woes, while risking the type of capital flight the province can ill afford,” said Brossard. “The government is taking a huge risk to jack taxes that will cover less than a week’s worth of deficit spending.”
The government estimates this will bring in $15.3 million. For comparison, the deficit is projected to reach $826 million in 2021-22.
The government will spend $3.54 billion on employee compensation in 2021-22, a $55-million increase from last year. According to calculations from the CTF, provincial government employees in the province earn a five per cent premium over their peers in the private sector, in addition to non-monetary benefits such as greater job security and guaranteed pensions.
“The government missed a good opportunity to meaningfully address its spending problems by removing the wage-premium provincial bureaucrats enjoy over private sector taxpayers,” said Brossard. “As the fiscal cliff draws nearer and nearer, ending the bureaucrat-premium will help make sure the province doesn’t fall off.”