Last weeks provincial budget was a heap of bad news for New Brunswickers. First they learned that they will continue to be burdened by a government with shaky finances driven by annual deficits and mushrooming debt. Topping that off, Progressive Conservative Finance Minister Blaine Higgs proposed a series of highly damaging tax increases as a way out of New Brunswicks deep fiscal hole. Unfortunately, these tax hikes will cast a dark cloud over New Brunswicks economic prospects and likely bring little revenue in return.
April 1st is an important day for British Columbians and we're not referring to the Easter long weekend. On that day BC officially scraps the HST and in one fell swoop restores the old Provincial Sales Tax system.
But moving back to the PST will cause harm to the provincial economy and BC families will lose out on the increased prosperity and jobs that the HST would have encouraged. Since our province will be poorer with the PST, it falls on our political leaders to take action to lessen the impact.
With economic growth slowing and a goal of balancing the budget by 2015, Finance Minister Jim Flaherty will have little fiscal room for major new initiatives in Thursday's federal budget. The risk is that the Conservatives continue with their fondness for new and/or expanded tax credits which have been sprinkled through federal budgets over much of the past five or six years (i.e Working Income Tax Credit, and tax credits for family caregivers, children's arts and fitness, and volunteer firefighters to name but a few).
There might be a thousand reasons why people hate sales taxes. Here are three: First, theyre visible; second, in Alberta, where no provincial sales tax exists, there is justifiable pride that people have escaped at least one tax applied elsewhere in Canada; third, many Albertans rightly fear that if a government introduced a new tax, it would be just another way to separate taxpayers from their money and to spend more and inefficiently so.
The last time Alberta was in a fiscal mess due to low energy revenues and over-the-top government spending, some politicians and pundits said what Albertans really needed was higher taxes. That was back in the late 1980s and early 1990s. Those voices were wrong then and they are wrong now.
For one thing, any fantasy that a tax hike will solve Albertas fiscal woes is the preserve of people who dream in tax-happy Technicolor.
Sure, tax reform is desirable. A provincial sales tax would be smart economic policy since sales taxes are some of the least harmful imposts.
The uncertainty that continues to impede the U.S. recovery coupled with political gridlock in Washington poses significant economic threats to not only the United States but also countries like Canada that trade with the U.S. However, imbedded within the many layers of risks lies a significant, long-term opportunity for Canada.
A policy issue that permeated political debates around the world in 2012 was the idea of raising taxes on high-income earners. In the U.S., it stood front and centre in President Obamas re-election. Several governments in Europe went beyond debate and introduced higher tax rates. Here at home, higher taxes on upper-income earners have been proposed at the federal and many provincial levels; Ontarios government recently instituted a new tax on those earning more than $500,000.
Last month, British Columbias Expert Panel on Business Taxation delivered its much anticipated final report (at least among us policy wonks). Unfortunately, the report garnered little media attention and failed to spark much debate about BCs tax competitiveness.
The Expert Panel was appointed early this year by then-Finance Minister Kevin Falcon; it was made up of a cross-section of people from business, academia, and government to provide recommendations on how BCs business taxes could be made more competitive given the return of the PST in 2013.
When the PST rears its ugly head on April 1, 2013, British Columbias tax competitiveness will be dealt a major blow as the cost of the investing in the province increases dramatically. Unfortunately, the well-being of BC families will be negatively affected in many ways none more important than the adverse impact the PST will have on investment in machinery, equipment, and technology the backbone of a healthy economy.