With the New Brunswick legislature just getting started and winter on its way, like clock work, for the third straight year, the province gears up for yet another long debate over whether or not to raise taxes.

The excuse for this year’s debate is the province’s last fiscal update which projects the deficit could be more than double what was expected – over $356 million. A scary thought for all.

Since the Alward government took office back in 2010, it has been forced to deal with the $800 million deficit left by the previous government. With that comes a chorus of politicians, academics, special interest groups and lobbyists calling on the province to raise taxes, cover off its deficit and move on.

This year’s debate was kicked off by the New Brunswick Liberal Party who said that it wanted to see the business tax that the government had reduced from 13 to 10 per cent re-examined. 

According to the Liberal Party’s budget in 2009, reversing its business tax cuts and hiking them back to 13 per cent would only raise about $20 million – a far cry from balancing the budget. Businesses should pay their fair share, but overburdening them to fix New Brunswick’s fiscal problems may backfire. The impact will be greatest on medium sized businesses that are already on the brink. Companies may be forced to offset the loss by either cutting costs (e.g. jobs) or passing on the costs to consumers. Given that New Brunswick’s unemployment rate is amongst the highest in Canada at 11.6 per cent, now is not the time to add to the cost of doing business.

Then there is the recurring suggestion of an HST increase.

Donald Savoie, the Canada Research Chair in Public Administration at the University of Moncton, again beat the drum for a 2 point HST hike. He suggests New Brunswick follow Nova Scotia, whose government broke its commitment not to raise taxes and instead jacked its HST from 13 to 15 per cent.

Mr. Savoie was part of a committee in Nova Scotia that recommended the HST increase. Since the HST increase came into effect, taxpayers in Nova Scotia have shelled out more than $700-million in its first two years alone. To put this in perspective that is an extra $446 taxes each year for every man, woman and child in the province. 

New Brunswickers simply cannot afford it. Since 2009, wages in the province haven’t kept up with inflation, and the costs of everything from food, gasoline and other necessities are all going up.

Mr. Savoie adds that along with raising taxes, the province needs to cut costs and embrace resource development. On both of these points, he is spot on.

The real culprit in the deficit mess is government spending. Since 2005-06, the New Brunswick government has increased spending by $1.8-billion. That equals $2,444 for every New Brunswick citizen. 

New Brunswick’s finance minister, Blaine Higgs, put forward a plan in the last provincial budget to reduce spending while not raising taxes. It’s not perfect, and not as aggressive as likely needed. (We recommend the province move more aggressively to sell Crown assets like NB Liquor, reduce the size of government and end wasteful spending on things like the politicians’ private plane). But, we should not let the perfect get in the way of the very good. Reform like the kind Mr. Higgs has put forward will take time. Let’s hope New Brunswickers, the Conservative caucus and special interest groups give it time to work.