Increasing net debt and debt interest payments a concern for P.E.I. taxpayers

Author: Paige MacPherson 2019/06/25

CHARLOTTETOWN, PE: The Canadian Taxpayers Federation is commending the Prince Edward Island government on a balanced operational budget, but warning that a reduced surplus risks the government tumbling into deficit.

“It was positive to see a balanced budget today, but the government has reduced the surplus it was handed from $13.8 million down to $1.8 million,” said CTF Atlantic Director Paige MacPherson. “That’s an 86 per cent decrease thanks to new spending. With a razor thin surplus, a strong wind on the revenue side could blow the province back into deficit.”

The government is adding over $100 million to the net debt by 2021-22.

“Increasing the net debt today means the government is deferring tax hikes onto future generations of P.E.I. taxpayers,” said MacPherson. “With relatively strong economic performance, the government should be paying down debt, not increasing it.”

Debt interest payments have risen to $128 million annually.

“Islanders are now paying over $350,000 per day on debt interest payments,” said MacPherson. “That’s money that could be spent filling potholes, lowering taxes or improving frontline services, but instead it’s being handed over to the big banks.”

The government decreased the small business tax by 0.5 per cent and increased the basic personal exemption by about $900.

“The tax relief in the budget was modest, but positive and it’s great that the government recognizes the need to reduce the tax burden on Islanders,” said MacPherson. “Going forward, we hope to see more broad-based tax reductions and actual debt reduction, decreasing taxes on future generations.”

The Canadian Taxpayers Federation released its 2019-20 P.E.I. pre-budget submission to the provincial government in February. It can be viewed here.