The Canadian Centre for Policy Alternatives says the Newfoundland and Labrador government should consider tax increases on wealthy citizens in its upcoming provincial budget instead of cutting spending.
In a report released Wednesday, the left-leaning centre said higher taxes could be another way to deal with the province's predicted economic shortfall.
"If they [the provincial government] were just to move for middle-of-the-pack for the country in terms of taxes, as a percentage of the economy, there would be $600 million more today," said Diana Gibson, the lead author of the report.
"And if they were to go closer to the top, that would be a billion more today, so the deficit could vanish if they had the tax structures of other provinces."
The centre does not recommend a broad-based increase on taxes, but rather an emphasis on high-income earners and "extraordinary profits" of large corporations.
Study commissioned by labour federation
The Newfoundland and Labrador Federation of Labour commissioned the report.
"To have this discussion around austerity and public-sector cuts, it just didn't make sense in the context of having such a vibrant economy," said federation president Lana Payne.
"So, what was going wrong here and what could we do about it?"
Gibson's report said cutting government jobs could hurt the private sector as well, which she described as a dangerous path to go down in an oil-based economy.
"Oil and gas isn't a job creation strategy," said Gibson. "It has the lowest number of jobs for any dollar put into it for any sector."
Deficit not an excuse
The report also said that a looming provincial deficit was not an excuse for making public-sector cuts because, historically, Newfoundland and Labrador has been conservative in its predictions.
"These messages of austerity and these actions of cutting back on the public service is really eroding the confidence that people had in what had been happening in our province," said Payne.
She added that she hoped Finance Minister Jerome Kennedy would consider the findings of the report before bringing down the budget next week.