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  • Betting on Bitumen: Alberta's energy policies from Lougheed to Klein June 8, 2017
    The role of government in Alberta, both involvement and funding, has been critical in ensuring that more than narrow corporate interests were served in the development of the province’s bitumen resources.  A new report contrasts the approaches taken by two former premiers during the industry’s early development and rapid expansion periods.  The Lougheed government invested […]
    Canadian Centre for Policy Alternatives
  • Canada-China FTA will leave workers worse off June 2, 2017
    Global Affairs Canada is currently consulting Canadians on a possible Canada-China free trade agreement. In CCPA’s submission to this process, CCPA senior researcher Scott Sinclair argues that an FTA based on Canada’s standard template would almost certainly reinforce rather than improve upon Canada’s imbalanced and deleterious trade with China. It can also be expected to […]
    Canadian Centre for Policy Alternatives
  • Faulty assumptions about pipelines and tidewater access May 30, 2017
    The federal and Alberta governments and the oil industry argue that pipelines to tidewater will unlock new markets where Canadian oil can command a better price than in the US, where the majority of Canadian oil is currently exported. Both governments have approved Kinder Morgan's Trans Mountain Expansion Project, but a new report finds that […]
    Canadian Centre for Policy Alternatives
  • Weathering the storm: is this the end of CRA’s political activities audits? May 5, 2017
    Yesterday, following a panel’s recommendation to allow charities more freedom to speak out, the federal government decided to suspend the Canada Revenue Agency’s controversial political activities audit program. Indeed this is good news for Canadian charities. Everyone at the CCPA is proud of the role our organization has played in challenging these audits and in […]
    Canadian Centre for Policy Alternatives
  • Unauthorized dams built in BC's northeast for energy companies' fracking May 3, 2017
    A subsidiary of Malaysian state-owned Petronas, the company behind a massive Liquefied Natural Gas plant proposal near Prince Rupert, has built at least 16 large unauthorized dams in northeast BC to trap water used for fracking operations, the Canadian Centre for Policy Alternatives has learned. Read the report.
    Canadian Centre for Policy Alternatives
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New Brunswick Tax Reforms: Pig in the Poke

As Andrew Jackson has written recently on this blog, the New Brunswick government is proposing a set of truly dreadful tax reforms. The proposals include:

  • a 10% flat tax for personal income, or a two-tier rate at 9% and 12%
  • reducing the corporate income tax from 13% down to as low as 5%
  • a carbon tax
  • increasing the provincial sales tax by two percentage points
  • reducing the provincial tax rate on non-residential properties by 33%
  • restraints/cuts to government spending from the shortfall in revenues

Each one of these measures is regressive in itself; combined I believe that they constitute the most regressive tax package put forward by any government anywhere in Canada.  The carbon tax is not connected to any other environmental measures and appears to be just a cash grab to finance the income and corporate tax cuts.  There are a few compensating measures that would be less regressive, including an increase in the basic personal amount, a child tax credit and a climate change tax credit, but these are relatively minor.

The New Brunswick Department of Finance released a discussion paper last month that is unfortunately highly biased, misleading and withholds information about the impacts.   The main references cited in the paper include the  C.D. Howe Institute (Jack Mintz was their main consultant), the Fraser Institute, Canadian Taxpayers Federation and even the U.S. Heritage Foundation and Arthur Laffer.  A number of these organizations have expressed strong support for these proposals.

A select committee of the N.B. legislature has been holding a fairly hasty set of consultations that are expected to wrap up next week.  They are planning to move forward with a package in the Fall and implement the reforms over the next five years.  One gets the sense that they are planning to steamroll ahead with these set of tax reforms, chosing the just slightly less offensive ones proposed.   New Brunswick already is already one of the least taxed provinces for households and business, according to both the Fraser Institute and the C.D. Howe Institute for what their measures are worth. The danger is that even deeper tax cuts would then force other provinces, and particularly other Atlantic provinces, to follow suit. 

There have been some excellent presentations to the committee opposing these proposals, including a number from New Brunswick economists and many others.  Andrew Jackson’s paper focusing on the impact on high income earners was presented by the New Brunswick Federation of Labour.

Having worked in different departments of Finance, I have to say that I was most disappointed not just by the proposals, but by how biased and miseading their discussion paper is.  Since they only included figures on the impact of the proposed income tax cuts,  I prepared a fairly comprehensive analysis of the impact of the major tax proposals on different household income quintiles in the province.

This analysis is included in the brief that CUPE’s President, Paul Moist presented yesterday, entitled Pig in the Poke.  It shows that these proposals would cost the bottom 60% of households an average of at least $500 more per year in higher taxes and the value of reduced services.  Meanwhile the top income quintile would benefit by an average of over $5,300 a year, including a $6,800 income tax cut.  There are some fairly dramatic tables and charts that illustrate the impacts in our document, as well as a critique of their main arguments.

The New Brunswick government is concerned about “self-sufficiency”, an ageing population and declines in their forestry and manufacturing industries.  It is important to propose progressive alternatives to address these concerns, but first of all these highly regressive and counter-productive tax proposals need to be stopped.

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