The next New Brunswick government should cancel planned personal income tax cuts to help erase the province's $749-million budget deficit, according to a taxation expert.
Craig Brett, the Canada research chair in Canadian Public Policy at Mount Allison University, writes in an election analysis for CBC News that politicians should start talking about how they will pay the government's bills in coming years.
Brett said he understands there is likely little support for hiking property taxes through municipalities, so it leaves the next government to consider raising more revenue from either the harmonized sales tax or personal income taxes.
"I think that a reversal of the recent income tax cuts is a sensible and fair way to help pay for public services," Brett said.
"I am open to HST increases or more radical suggestions like a carbon tax, provided they are combined with tax credits, themselves essentially a tweaking of the personal income tax, to offset the potential harm done to poor families."
In a CBC News and L'Acadie Nouvelle poll released Monday, 81 per cent of respondents said they were concerned about the province's $8.3-billion debt. But only 25 per cent were willing to pay more income tax or sales tax to help address the budgetary problems.
And only one-third were willing to see the provincial government cut services and programs to tackle the red ink.
The Liberals have promised during the election campaign that they would push forward with their planned personal and corporate income tax cuts if they are re-elected on Sept. 27.
The Liberal tax plan would merge the province's four tax brackets into two by 2012.
People earning less than $37,893 would be taxed at a rate of nine per cent and those earning more would be subject to an income tax rate of 12 per cent by 2012.
The Progressive Conservatives have committed to halting the planned corporate tax cuts at 10 per cent, rather than dropping the rate to eight per cent as legislated by the Liberals.
Further, David Alward's Progressive Conservatives have committed to stopping the Shawn Graham government's tax cut for New Brunswick residents earning more than $118,000.
The New Democratic Party rolled out a campaign manifesto Monday that promised to hold the line on taxes.
All the major parties have promised not to raise the HST if elected on Sept. 27.
Nova Scotia Premier Darrell Dexter raised his province's HST by two percentage points, which restored the combined sales tax to the level that existed before Prime Minister Stephen Harper cut the federal GST.
A one-percentage-point increase in New Brunswick's HST would raise roughly $125 million. So, if a New Brunswick government copied Dexter's tax tactic, $250 million of the budget deficit — about one-third — could be recouped.
When the province enters into a taxation discussion, the Mount Allison University economist said it's important to erase some myths of tax policy.
Brett said cutting taxes does not always boost economic activity as some tax-cutting proponents argue. But the economist said there may be an exception when it comes to cutting New Brunswick's corporate tax rate.
New Brunswick collects $187 million annually in corporate taxes.
"Given the relatively small amount of money that corporate taxes currently raise, there is no great threat to public services involved in cutting corporate taxes in the hope of reaping the rewards of potential stimulus," he said.