Taking the easy way out

Sometimes I can’t believe I am the guy arguing against tax cuts in New Brunswick. It seems, on the face of it, to be counter to a pro-economic development mindset.

But after reading Al Hogan’s 743rd editorial asking for deep tax cuts, I feel compelled to ask him and everyone else to think a bit. Forget AIMS for a minute. Forget Rotman. Just think.

14.3% of Ireland’s total budget comes directly from corporate taxes – 3% of New Brunswick’s budget. I know that this is not an apples to apples comparison but think it through.

The average Calgarian taxpayer pays $11,431 in income taxes alone. The average Monctonian taxpayer pays $6,906 in income taxes. The Calgarian pays 65% more income taxes than the Monctonian even though his/her tax rate on average is almost 10 percentage points lower than the Monctonians.

Think this through.

Economic development has got to be about creating the environment for successful companies and successful people.

Now, again think this through. Cutting the personal income tax will not raise the income level of New Brusnwickers by one iota. It will not attract one more high paying job. In fact, if the money is diverted out of economic development infrastructure funding or R&D or health care or education, you might actually conclude it will lead to even less high paying jobs over time.

Rotman, AIMS and the boys don’t conclude this because their thinking is based on either ideology only, national economies with no relevance to little old New Brunswick or other models in strong economies (again not relevant to New Brunswick).

Ask anyone on the street. Would you rather have $10,000 more in income every year or pay $1,000 less in taxes. Unless they are crazy, they would respond with the former.

The same thinking has to apply in New Brunswick. We need to be focused on wisely investing taxpayer dollars in ways that will raise the economic potential of this province – not just cut away taxes at the margin and cross our fingers. That’s bad policy and an abdication of the trust the public puts in their government.

The time for tax cuts will come. But it is not now.

One last point on this. People are moving to New Brunswick – and particularly Moncton – because it is considerably cheaper to live here than in larger urban centres in this country. I know that some folks argue about this but it is true. Even when we were in the middle of the bitter auto insurance debate a few years ago I noted with some glee that the rates were still well below Ontario. Your house insurance is higher, property taxes are higher, etc. – sure this is tied to home values but it is still a cost out of pocket.

So to say that someone will pay an extra $900/year in personal tax in New Brunswick and ignore the $8,000 in housing cost savings is just silly.

So, I see almost no economic benefit from across the board tax cuts and potentially serious negative implications as we fall deeper and deeper into the Equalization trap. It is very hard for me to ignore the fact that for every dollar cut out of the revenue stream by Premier Lord’s tax cuts – we have added three in Equalization (using their own estimates).

I don’t see the merit. So Al Hogan would be advised to step out of his bubble for once and take a wider angle look at this stuff.