Nfld. & Labrador

More taxation, not widespread cuts, key to taming N.L.'s fiscal monster, says MUN prof

The solutions to Newfoundland and Labrador's financial woes should include higher taxes and fees, says a Memorial University professor.

St. John's conference looks for 'reasonable solutions' to financial quagmire

Russell Williams, a professor of political science at Memorial University, says Newfoundland and Labrador should be collecting more taxes and fees in order to address its fiscal challenges. (Eddy Kennedy/CBC)

The solutions to Newfoundland and Labrador's financial woes should include higher taxes and fees, says a Memorial University professor.

"That's an important part of this conversation, to ask the question: why it is that if we're in crisis and we're headed towards bankruptcy? Why is it that we have tax rates that are lower than the other Atlantic Canadian provinces? This is a strange choice," political science professor Russell Williams told reporters Tuesday.

Williams was one of the presenters at a forum, entitled "Reasonable solutions to Newfoundland and Labrador's fiscal reality," hosted by MUN's department of economics at the Signal Hill campus, attracting academic, political and business leaders.

He took special aim at property tax, and figures showing that per capita tax on property in Newfoundland and Labrador, at just over $900, is the lowest in the country.

He also targeted people living in unincorporated areas who do not pay municipal taxes.

Finance Minister Tom Osborne and Auditor General Julia Mullaley were two of the speakers who addressed a conference at the Signal Hill campus of Memorial University on Tuesday. The conference, hosted by the university's department of economics, explored ways to address the province's fiscal challenges. (Terry Roberts/CBC)

"We're talking about $350 million relative to the average for other jurisdictions in the region, simply to adopt the kind of property taxation systems that we see in other provinces," he said.

And charging more to use the intraprovincial ferry system should be considered, he added.

"Is it more important to deliver very low-cost ferry service or free municipal services for some unincorporated areas? Or is it more important to fund health care as a core responsibility of the government?" he asked.

Sobering financial overview

Part of the forum included a sobering overview of the province's finances by Auditor General Julia Mullaley, with the customary commentary about the province's country leading per-capita net debt, a string of painful deficits that are not likely to end any time soon, and about the pressure Muskrat Falls is putting on the treasury.

Mullaley's comments also included her usual warning that the province is not living within its means.

"If we want to do the right thing, again for our children, and for our grandchildren and for the future, we don't have a choice. We need to act," she stated.

Finance Minister Tom Osborne countered that the government is taking a cautious and methodical approach to cutting spending, primarily through attrition that has cut 1,000 jobs since 2016.

"We cannot put any additional pressure on businesses or people in the province without facing other significant challenges such as outmigration and a further rapid aging population," he said.

Some special interests have called for a gutting of the public service. But Williams sees another way — one that might not be appealing to many politicians. 

Ensuring that the tax system is more fair and equitably distributed is a better choice than simply slashing public services.- Russell Williams

"Ensuring that the tax system is more fair and equitably distributed is a better choice than simply slashing public services," he said.

Williams admitted there are no easy choices, but said the consequences of inaction or political paralysis might be more painful. 

"The challenge for the government is to look into its toolbox and figure ways it can tackle these revenue problems for the minimum political cost."

Read more from CBC Newfoundland and Labrador

About the Author

Terry Roberts is a journalist with CBC's bureau in St. John's.

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