Time for tax relief after four balanced budgets
This op-ed was published in the Halifax Chronicle Herald on March 28, 2019.
Another balanced operational budget is good news for Nova Scotia taxpayers, but the debt is still growing and Nova Scotians still pay some of the highest taxes in Canada.
Delivering four balanced operational budgets in a row is fantastic, but, after four budget surpluses, significant broad-based tax relief for working Nova Scotians is long overdue.
Lowering taxes will be key to stimulating the economic growth needed to become financially sustainable and support its aging population over the long-term.
The McNeil government delivered a $33.6 million operational surplus, meaning it isn’t borrowing money just to keep the lights on. But with the debt increasing by $200 million to $15.3 billion this year. The government is kicking the can down the road to future generations who will pay for it in tax increases tomorrow.
The Nova Scotia government – like other governments across Canada – divides its operational and infrastructure budgets. It doesn’t much matter whether you spend your money on groceries or a new lawn mower. Debt is debt. If you’re running up your credit card bill, you’re still wasting money on debt interest payments.
In 2019-20, the government will spend $856 million on debt interest payments. That money will be handed over to the big banks on Bay Street and Wall Street, instead of being spent on hospital beds, doctors, textbooks or tax relief.
Departmental spending in Nova Scotia is going up by over $400 million this year, so the government simply isn’t living within its means.
The balanced operational budget is thanks to an increase in cash from Ottawa. Money from the three main federal transfers – equalization, health and social transfers – is up $148.6 million this year, while own-source provincial revenues are predicted to decrease.
The Nova Scotia government could, within reason, spend that cash from Ottawa on whatever it wants, so ensuring it’s put toward a balanced operational budget is better than many alternatives.
But banking on Ottawa to ensure financial sustainability is a risky plan. Nova Scotians don’t control what Ottawa does and neither does the Nova Scotia government. The province has been let down before, and rising interest rates impacting Ottawa’s gargantuan debt interest payments could significantly impact Nova Scotia’s take in the future.
What the provincial government can control is its own spending – which continues to increase – and its own tax rates, to make Nova Scotia a more competitive (and affordable) place to live.
The province needs doctors. Nova Scotians need jobs. The premier and finance minister should lower taxes to attract more professionals, more people and more investment to the province.
Nova Scotians didn’t see a nickel of broad-based tax relief in this year’s budget. The government announced millions of dollars in even more corporate welfare – including the recent announcement to spend $22.3 million on subsidizing the Yarmouth ferry and infrastructure in the United States. That money easily could have gone toward tax relief for Nova Scotia families and businesses instead.
Continuing to balance the operational budget shows the government is acknowledging that keeping spending under control is important. Taxpayers can be thankful for that, and it’s a great first step.
Reducing the debt to avoid tax increases tomorrow, and delivering much-needed tax relief for Nova Scotians today, can pave the way for the growth, jobs, people and doctors the province seriously needs.
Paige MacPherson is Atlantic Director of the Canadian Taxpayers Federation.