There’s a step people often forget when they’re writing up a protest chant.
The math.
At a recent rally protesting Nova Scotia’s budget, some demonstrators chanted: “Bring back HST, don’t cut our communities!”
There’s a catchy rhythm to it, but the numbers don’t add up.
Taking that relief away now would punish taxpayers for government’s failure to control spending.
And here’s the key point: even if government did reverse the HST cut, it still would not solve the province’s budget problem.
Nova Scotia’s problem is not that taxpayers are undertaxed. The problem is that government is overspending.
This year’s budget makes that painfully clear.
The Houston government may be talking about restraint, pointing to cuts to bureaucracy and grant funding that are supposed to save about $305 million.
But those savings are dwarfed by the bigger picture: overall spending is still rising by $1.4 billion compared to last year’s budget.
As a result, the province’s debt is set to increase by $5.5 billion compared to last year’s budget. Nova Scotia’s debt will sit at $27.9 billion by year-end. That works out to about $25,000 per person.
Debt interest charges alone will cost taxpayers more than $1 billion this year, or more than $2.8 million every single day.
Finance Minister John Lohr acknowledged soaring interest charges in his budget speech: “Every dollar spent servicing debt is a dollar we cannot spend responding to new challenges or protecting essential services.”
But if government really believes that, it should stop piling on more debt instead of looking for excuses to raise taxes.
The good news is Nova Scotia does not need tax hikes to get back on track. It needs spending discipline.
Here’s how.
First, the province should stop handing out corporate welfare. Nova Scotia taxpayers are on the hook for more than $377 million annually in business subsidies. That’s a massive amount of money being funnelled into politically favoured deals instead of broad-based tax relief that helps every business compete.
Second, the government should bring non-health spending back to 2022 levels. That would save about $848 million in a single year while protecting the government’s stated priority of improving health care. Despite election commitments, about 60 per cent of recent new spending has not gone to health care anyway.
Third, the province should tackle bloated government compensation costs. Salaries and wages are now tied for the largest line item in the budget. Research indicates that government employees in Canada earns an 8.5 per cent wage premium over private counterparts. Bringing compensation more in line with the private sector through attrition and reform could save another $544 million.
That’s the real path forward: cut waste, control spending and stop making taxpayers pay for government’s lack of discipline.
Reversing last year’s HST cut would mean reaching deeper into taxpayers’ pockets at exactly the wrong time. Families are still dealing with high grocery bills, high housing costs and higher borrowing costs.
The one-point HST cut was a smart move by the Houston government that gave people breathing room.
Last year’s HST cut saves the average Nova Scotia household about $350 annually. That’s not pocket change. That’s money for groceries, school supplies, kids’ activities or keeping up with power bills. After years of affordability pressure, the answer is not to claw that money back.
In fact, the provincial government should not just defend the HST cut. It should go further.
Nova Scotia still has one of the highest provincial sales tax rates in the country. Sales taxes hit hardest when life gets more expensive because the tax grows as prices rise. That hurts lower- and middle-income families the most.
The HST cut was a good move. Reversing it would be a mistake. The better option is to keep taxes moving down while government finally does the hard work of cutting wasteful spending.
Nova Scotians do not need higher taxes.
They need a government willing to live within its means.
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