Blaine Higgs ponders income tax hikes to 2008 levels
Tax increases could reduce New Brunswick's projected $411M deficit
By Robert Jones, CBC News
Posted: Feb 21, 2013 6:42 AM AT
Last Updated: Feb 21, 2013 12:19 PM AT
A proposal under consideration by Finance Minister Blaine Higgs to rescind income tax cuts passed by the former Shawn Graham government could generate some of the highest rates in the country and wreck a tax reform package both Liberals and Progressive Conservatives endorsed just four years ago.
New Brunswick currently has some of the lowest income tax rates in the country among have-not provinces, including the lowest for residents with incomes above $150,000, according to information compiled by the Canada Revenue Agency.Finance Minister Blaine Higgs has raised the idea of rolling back the personal income tax cuts implemented by the former Liberal government. (CBC)
Higgs says repealing those low rates, which were passed unanimously by Liberals and Progressive Conservatives in 2009, is one of several revenue generating ideas he's considering to try and close the province's $411-million budget deficit and pay for a series of unfinanced 2010 campaign promises.
However, it may be the frontrunner, since Higgs has already discounted some competing ideas, including raising the harmonized sales tax.
"Our commitment has been clear that without a referendum we won't implement the HST," he told a public meeting in Moncton on Jan. 28.
A required referendum also makes highway tolls unlikely and then last week Higgs told the CBC that a $115-million health levy he has been pondering is now on life support as well.
"We have talked about a health levy. It is unlikely anything will come forward in that world," said Higgs.
That leaves repealing the Graham-era income tax cuts as the only proposal left capable of generating a substantial amount of money and Higgs has spent a great deal of time detailing exactly how much it could bring in.
"Here's what the income tax reduction plan did to us over the last three years," Higgs told audiences over and over on a pre-budget tour of the province that wrapped up in late January.
"In the first year it was $144 million; second year $258 million and the third year and subsequent years $325 million. [That is] $325 million without an offsetting revenue gain."
'You're going to notice that significantly'
Higgs has suggested the provincial government could recapture that money for itself by returning tax rates to where they were in 2008 in staggered increases over the next three years.
It's a proposal endorsed by several union and social groups, as well as a number of regional economists, who published an open letter in December calling for a return to 2008 income tax levels.
But that would elevate tax rates in New Brunswick to the highest in the country for many income groups and abandon a tax reform measure to move away from income taxes that Progressive Conservatives and Liberals both promoted as good for the province in 2008.
Brenda Avery, a tax preparer with the Rothesay firm Brentax, said income tax cuts in New Brunswick were deep and unwinding them won't go unnoticed by the public
"They're saving several hundred dollars," said Avery.
"So when we're talking about changes if the government decides to raise that again, will it be noticed? Absolutely, you're going to notice that significantly.
Currently, Nova Scotia has the highest provincial income tax rates in the country.
A single Nova Scotian who earns $48,000 and claims basic deductions can expect to pay $4,335 in provincial income tax this year according to the Canada Revenue Agency. That's $832 more than a New Brunswick resident, an advantage that would more than disappear if New Brunswick reverted to its 2008 rates.
That year, New Brunswick residents making $48,000 paid $4,453 in provincial income tax — $118 more than Nova Scotians do today and $950 more than New Brunswick's current rate, according to CRA payroll deduction tables.
The difference is much greater for those with higher incomes.
All-party committee endorsed tax cutsFormer premier Shawn Graham, seen here at a news conference in 2010, won support from the Tories for his plan to cut personal income taxes. (CBC)
The idea to raise income taxes comes despite an all party call to move away from that kind of revenue in 2008. New Brunswick's Select Committee on Tax Review studied and endorsed the idea of cutting provincial income taxes dramatically and replacing the revenue with higher consumption taxes, specifically the HST.
"These reforms are designed to put more money in the pockets of New Brunswickers and stimulate greater opportunity in our economy," concluded the Committee, which hired experts, invited submissions and held public meetings.
"By adopting these changes New Brunswick will stand a greater chance of retaining its young people and the skilled workers who are necessary for a healthy economy and society. Properly implemented, these reforms should provide significant incentive for former New Brunswickers to return to their province as workers investors or both."
The committee was dominated by Graham government Liberals, but had three Tory MLAs, including former finance minister and interim leader Jeannot Volpé and current Transportation Minister Claude Williams. All of the politicians endorsed the idea of cutting income taxes and raising the HST to replace lost revenue as the best route to prosperity.
Ironically, while on CBC last week, Higgs lamented how a succession of New Brunswick governments have not followed through on reforms previous governments started.
"What's been the success of one party over another for years and years," said Higgs.
"It's been in a lot of ways undoing what the last party did. You know that's not moving the province anywhere forward. That's just in a cycle — caught in a rut."
Latest New Brunswick News Headlines
- 'Sense of panic' surrounded Ashley Smith
- The prison where Ashley Smith died had a sense of panic around the teenager, an inquest heard Tuesday. more »
- Conservatives closer to selling government airplane
- New Brunswick's Progressive Conservative government is a step closer to fulfilling a promise to sell the government-owned airplane used by the premier and members of cabinet. more »
- Catastrophic drug plan coming by fall, health minister says
- New Brunswick's health minister says he expects to begin rolling out parts of a catastrophic drug program as early as this fall. more »
- Tory minister denies nixing class trip to Trudeau rally
- New Brunswick's education minister is defending the decision earlier this year to cancel a high school class trip to see a federal Liberal leadership campaign event hosted by Justin Trudeau. more »
Top News Headlines
- 2 men jailed in Dominican wedding fight return to Canada
- Two Canadian men who were detained in the Dominican Republic for nearly three weeks after a post-wedding fight broke out at a resort have returned to Toronto, the latest step in a drama that the wife of one of the men said was "like a scene from the movies." more »
- Senators call for 'zero tolerance' on harassment in RCMP
- The RCMP should amend its code of conduct to explicitly define and prohibit harassment, a Senate committee is recommending in a newly tabled report. more »
- Are e-cigarettes safe to puff?
- As electronic or e-cigarettes grow in popularity, some health advocates want them to be regulated. more »
- Most groups don't want return of Trudeau speaking fees
- Most of the 17 charitable and other organizations that have paid speaking fees to Liberal Leader Justin Trudeau during his time as an MP say they aren't interested in having their fees returned, despite Trudeau's offer on the weekend to reimburse any organization unhappy with his services. more »
- Miramichi student mourned after fatal crash
- Tory minister denies nixing class trip to Trudeau rally
- Thieves steal 9-metre rowing dock in Fredericton
- Province urged to deal with shale-gas protests
- Saint John pushes regional police force
- FHS students arrive in style to their prom
- Fredericton's only French radio station may close
- Grace Foundation dodges Trudeau questions
- CenterBeam sale 'exciting news,' says CEO