Four New Year’s Tax changes hitting your wallet
This column was published in the Telegraph-Journal on January 9, 2019.
The federal and New Brunswick governments rang in 2019 with new tax changes hitting your wallet.
1) The Carbon Tax
This year, New Brunswickers will finally see the impacts of the carbon tax. After months of political spin from Ottawa – some from cabinet ministers even suggesting the virtual mathematical impossibility that this new tax will actually give us all more money – the federal carbon tax comes fully into effect in April.
It will start by spiking gas prices by 4.6 cents per litre and keep increasing to 11.6 cents in a few years. The price of home heating and everything else will increase too.
But it won’t make a dent in climate change. In British Columbia, home of Canada’s most expensive carbon tax, emissions continue to rise year after year.
As New Brunswick prepares to challenge Ottawa’s carbon tax in court, taxpayers will face costs in the meantime.
2) CPP Payroll Tax Hikes
New payroll tax hikes to Canada Pension Plan rates mean the average Canadian will pay an extra $98 this year.
When the CPP increases are fully implemented in five years, mandatory payments will total $550 every year. Even after CPP income tax deductions, an average Canadian making $60,000 will still face an annual net loss of $380.
The hikes will give the CPP Investment Board more cash to buy pricey NFL Wild Card Weekend ad spots, but it’s bad news for New Brunswickers who want to save money on their own terms. Families could save that money in registered savings accounts that they could also use for a first home or education, but the government is taking away that choice by sucking it into CPP.
3) A Sneaky Tax Hike Called Bracket Creep
We all know that the cost of groceries and other goods rises every year with inflation. As a result, some of us get cost-of-living pay increases from our employers. This allows us to simply keep up with the increasing cost of the things we buy.
If governments don’t also move up their tax brackets in step with (many) paycheques and grocery bills, taxpayers are unfairly pushed into higher income tax brackets and pay more tax even though they don’t have an increased ability to buy the things they need. It’s bracket creep.
Most provinces have eliminated bracket creep by indexing tax brackets to the provincial rate of inflation. But New Brunswick uses the federal inflation rate, which was nearly one per cent lower than the 2018 provincial rate, to index its tax brackets, causing bracket creep tax hikes for New Brunswickers.
It doesn’t cost much, but it’s a sneaky tax grab that should be scrapped.
4) Deficits are Future Tax Hikes
Even more significant is the guarantee that New Brunswick’s budget deficits will mean tax hikes in the future. Past governments were responsible for a decade of consecutive deficits, and the projected $14.3 billion debt has almost doubled in that time.
The Higgs government has indicated it will reduce spending, so taxpayers should look for proof in this year’s provincial budget. That New Year’s change would save future New Brunswickers from even higher taxes and fewer jobs down the road.
New Brunswickers already pay some of the highest taxes in Canada and even nickel-and-dime tax hikes are becoming too much. It’s time for governments to deliver tax relief for New Brunswick families today and tomorrow.
Paige MacPherson is Atlantic Director of the Canadian Taxpayers Federation.