Frustrating...is the only word that comes to mind watching one business leader after the next speak at the Future NB conference. Each of them acknowledged the debt and spending problems of the provincial government and then advocated for a tax hike.

Don Drummond, of the Toronto Dominion Bank, led the tax hike charge. He suggested to the conference of about 250 interest groups (none representing average taxpayers) that New Brunswick increase its HST by 2 percentage points. He says raising taxes combined with spending cuts are the only way to curb the province’s deficit. Later, David Ganong, co-chair of conference, echoed the plea for raising the HST.

Mr. Drummond says the province could earn $125 million more in revenue for every percentage point the government increases the HST. But increasing taxes is not the panacea tax hike supporters think it is. Raising taxes slows economic output and the government never actually gets the revenue it thinks it will.

In proposing an HST hike, Drummond fails to mention that other tax revenue could decrease. In Nova Scotia, when the HST was raised, revenue from other sources, like income taxes, fell by almost $20 million in one year alone.

A tax hike in New Brunswick will have even a greater negative effect since middle class families have nothing left to give.  According to Statistics Canada, between September 2009 and 2010, the average weekly wage in New Brunswick fell by 0.2 per cent. Combine this with the provincial inflation rate of 1.8 per cent and you have a situation where working families have less at the end of the week. Trying to grab more tax revenue from New Brunswickers now when their disposable income is in decline, is like trying to squeeze water from a stone.

It cannot be overstated how adversely an HST increase will affect job recruitment and the economic growth of the province. An HST tax increase will result in New Brunswick losing its competitive tax advantage vis-a-vis the other Maritime provinces. Case in point, Maple Leaf foods recently decided to move jobs from its plant in Berwick, Nova Scotia to Moncton. Angry politicians in Nova Scotia are crying foul, claiming the reason for the move was the better tax rate in New Brunswick.

The fact is, New Brunswick does not have a revenue problem; it has a spending problem.

Over the last four years alone, the previous Liberal government saddled the new government with $1.65 billion in new spending. That’s an increase in the total provincial expenditures of about 26 per cent. The province has not seen a growth in expenditure of that magnitude over such a short period in its entire history.

Despite massive government spending, there are few if any who will agree that health care or education services have correspondingly improved.

No one is saying that balancing the budget without raising taxes is going to be easy. But the argument that the province can’t balance the budget on spending cuts alone is unconvincing considering the massive increase in spending over the last few years.

Leading up to the 2011 budget, there are two divergent ideologies in play: the Future NB conference that believe it’s time to raise taxes; and that of our group, the Canadian Taxpayers Federation, that believes that the average taxpayer has paid enough and it’s time for the government to get its own house in order. It is a debate I know our Federation is looking forward to.