New Brunswick Premier Blaine Higgs is building a New Brunswick Advantage.
For years, politicians in Alberta would talk about an Alberta Advantage. Just 15 years ago, Alberta had no provincial debt, no sales tax and the lowest income tax rates in the country.
Over the past 15 years, the situation has changed.
For many Albertans paying income tax, their province no longer has the lowest income tax rates in the country. The province has also racked up tens of billions of dollars of government debt. Thankfully, Albertans still enjoy the advantage of being the only province without a sales tax – for now.
Canada’s Atlantic provinces, on the other hand, are some of the most difficult places to live for taxpayers. All four Atlantic provinces have a 15 per cent sales tax, the highest in the nation, as well as some of the highest income tax rates.
But Higgs has been steadily charting a new course for New Brunswick. Now New Brunswick is starting to separate itself from the Atlantic pack, with a lower tax burden, consecutive balanced budgets and falling provincial debt.
Last week, Higgs announced sweeping new income tax cuts that will lower the tax burden for the vast majority of New Brunswickers.
Higgs’ income tax cuts represent the most significant income tax cuts in a generation. For a taxpayer earning $75,000 a year, Higgs’ tax cuts will deliver $214 in tax relief a year and over $1,000 over a five-year period.
Compare the progress in New Brunswick to the situation in neighbouring Nova Scotia. With Higgs’ new tax cuts in place, a New Brunswicker making $75,000 a year should expect to pay $8,606 in provincial income tax this year. A Nova Scotian earning the same amount of money would have a $9,270 provincial income tax bill, $664 more than a taxpayer in New Brunswick.
And thanks to Nova Scotia’s regressive bracket creep policies, that $664 gap is going to keep growing year after year.
Bracket creep occurs when inflation pushes taxpayers into higher income tax brackets because the government fails to index tax brackets to inflation.
New Brunswick indexes its income tax brackets. So does the federal government and the vast majority of the provinces. Only Nova Scotia and Prince Edward Island do not. That means the emerging New Brunswick Advantage will only grow in the years ahead.
Higgs is also leading the way on debt reduction.
Unlike any other province, New Brunswick balanced its books every year during the pandemic. And New Brunswick’s debt is going down, not up. Some provinces have fake balanced budgets with balanced operating spending while still borrowing money to pay for finance infrastructure projects. But in the past year alone, the Higgs government reduced the province’s debt by nearly $1 billion.
Higgs’ job is well underway, but far from finished.
Because many of his predecessors overspent and racked up bills on the taxpayer credit card, New Brunswickers still owe more per capita in government debt than their neighbours in Nova Scotia and Prince Edward Island. Higgs will have to keep working to lower that debt burden and the hundreds of millions of dollars of debt interest payments that come along with it.
Still, the province is clearly moving in the right direction.
New Brunswick is emerging as one of the most fiscally responsible provinces in the nation.
The province had the only government in Canada that balanced the budget during the pandemic.
New Brunswick’s income tax burden is now the lowest in the region. It even beats out provinces like Manitoba and Quebec.
And New Brunswick’s debt reduction is real. The province’s surpluses are real surpluses, unlike most other provinces that claim to have balanced their books.
While Higgs’ work is far from finished, he is helping to usher in a new era of a New Brunswick Advantage.