The fiscal box tightens

June 17, 2010 9:30 PM

The Liberals and Progressive Conservatives have quietly made what may amount to their largest campaign commitment in the upcoming election campaign and barely anyone has noticed. In separate editorial board meetings with a Moncton newspaper and other public comments (Here are the promises: Liberals, Tories and both), the parties have committed to not raising taxes if they are elected.

New Brunswick is facing a $754-million deficit and many observers warn that figure could balloon. The largest issue in the upcoming campaign may not be NB Power or citizen engagement, but the future of the economy and in particular the impact on public services as the next government tackles the deficit.

By promising not to hike taxes, neither Liberal Leader Shawn Graham nor Progressive Conservative Leader David Alward are spending more money. But they are shutting the door on an avenue to increase revenue. This means the deficit will have to be fought by cutting other social services or government programs. Unless you believe the New Brunswick economy is going to start growing at a white-hot pace and just magically put the province's books back in the black.

This blog is not about to take sides on whether taxes should be increased or decreased as a political philosophy. It should also be noted that there could be more context to these tax cut pledges that may give some political leeway to the next premier. However, these promises -- if they are kept -- will put the next government into a tight fiscal box.

Nova Scotia Premier Darrell Dexter has opted to raise the Harmonized Sales Tax, a proposal that was co-written by a special panel that included Donald Savoie, the Canada research chair in public administration. That decision could cost the province jobs and highly skilled workers, who want a lower tax jurisdiction to call home. The other argument that can be made is Nova Scotia will drag itself out of deficit much faster than New Brunswick and be in a better position to attract jobs and top-notch workers in the future as this province copes with cuts to social services.

The point is, these promises raise many implications for the province but they have been made by the two parties with the best chance to form the next government in such a way that there is no opportunity for a broader debate on the subject.
-- Daniel McHardie

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