Nfld. & Labrador

Most people don't understand basic government finances, N.L. tax review finds

A report into the provincial tax system has come back with recommendations to keep taxes steady and educate the public.

'Hold the line' on taxes and better educate provincial residents, report says

Steve Jerrett, chief administrative officer and town manager of Botwood, is the chair of the province's tax review committee. (Jeremy Eaton/CBC)

A report into the provincial tax system has come back with recommendations to keep taxes steady and better educate the public on government finances.

The committee, composed of non-government people from across the province with various financial backgrounds, laid out its findings in a 40-page report on Wednesday.

One of the main findings in the wide-ranging report is the lack of understanding people have of their taxes.

"Many residents of Newfoundland and Labrador seem to have little or no understanding of basic government finances," wrote committee chair Steve Jerrett in the findings.

It was the biggest surprise for Jerrett, the town manager in Botwood, throughout the course of the provincewide tax review.

The survey hit me in the face.- Steve Jerrett, committee chairperson

The committee sent out a survey, asking respondents their views on taxation and to rank their knowledge of how the government spends money. According to the final report, more than 75 per cent of the 400 respondents were "surprised by some very basic facts."

"I'm comfortable with government finances, and I guess to a degree I assumed that a lot of people are comfortable with government finances," Jerrett said.

"Well, the survey hit me in the face."

Most of the people surveyed for the report were "surprised by some very basic facts" about government finances, Jerrett said. (Shutterstock)

People were upset with services like health care, but also felt they were overtaxed. They were also surprised to learn that all money generated from income tax and sales tax — approximately $2.8 billion — still doesn't come close to covering the cost of health care alone.

As a result, the committee recommended government "must do a better job of educating and explaining our province's finances in a practical manner that engages more residents," and a better job explaining it's impossible to meet everyone's budget requests.

Taxes should stay steady

The committee also recommended government "hold the line" and not make any significant changes to taxes. When compared to other provinces, the rates in Newfoundland and Labrador are within the average range.

A chart looks at average tax rates across the country. (Independent Tax Review Committee)

While the 2016 budget came as a shock to citizens around the province, the amount people were paying the province was comparable to the same rates in 2006, before oil revenues spiked.

While the committee was only tasked with looking at taxes and not expenditures, Jerrett said the conversation often wandered to government spending. After all, as long as government keeps spending above revenues, the province's fiscal situation is unlikely to change.

"The province's long-term financial situation has to be paramount," Jerrett said. "They have to put in a plan to balance the budget."


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