Source: The Canadian Press
New Brunswick Premier David Alward finds himself under growing pressure to break his promise not to raise taxes in order to rein in a ballooning deficit as he begins his mandate Tuesday with a throne speech.
The Conservative leader, elected by a landslide in the September provincial election, is faced with difficult choices as New Brunswick struggles to overcome its dismal fiscal position.
The province is saddled with a debt projected to hit $9.5 billion next year. Last week, Finance Minister Blaine Higgs said the deficit is now more than $800 million — at least $50 million more than the province’s previous forecast.
The president of the Atlantic Provinces Economic Council says the government must consider raising taxes if it is to get control of the province’s finances.
“What we have to do is look at the big areas such as the HST which is a broad based tax on consumption, and income taxes which all of us have to pay at a certain level,” Elizabeth Beale said.
Beale said tax cuts by the previous Liberal government have impeded the province’s ability to grow revenues, and the new government needs to change course.
During the election campaign, Alward said he would cancel planned tax reductions for the 1,300 richest New Brunswickers who have an average annual income of $450,000. He also promised to cancel a cut in the corporate tax rate.
He has vowed repeatedly that he would not raise the harmonized sales tax.
That’s sound economic policy, said Kevin Lacey, Atlantic director of the Canadian Taxpayers Federation. He says with other provinces raising the HST, Alward should resist the pressure to do the same.
“In Nova Scotia when they raised the HST, the revenue actually fell because the economy was hurt as a result from it,” Lacey said. “Raising taxes is not the answer that a lot of these experts think it is.”
He said the government should look to privatize some assets such as NB Liquor.
“Opponents of privatization say that after the NB Power debacle, we should not go down that road,” he said. “But the NB Power deal was a Hydro-Quebec takeover and other privatizations should not be measured against it.”
Higgs says cost-cutting measures and training a more thorough eye on government expenditures must be done first.
Every government department has been ordered to cut spending by 1% this year and 2% annually for the next three years.
“They can’t be paper savings. They have to be real,” Higgs said. “It isn’t a case where someone presents a budget and says, ‘I can do that for this year.’ It’s, ‘You can do that every year.”’
But Liberal Opposition Leader Victor Boudreau said if the Alward government is serious about reducing the deficit, then a 2% cut in spending won’t be enough.
“They have approximately $150 million in new spending commitments that they made during the campaign, over and above any cost-cutting measures,” Boudreau said.
“You can either cut services or raise taxes, or we had taken the approach of growing the economy, but obviously they didn’t think that was possible,” he said. “They didn’t set any targets whatsoever as we did on growing the economy.”
The Liberals had made a campaign promise to create 20,000 jobs in the next four years and implement measures to add 12,000 people to the province’s population by 2014.
The fall session of the legislature is expected to last four weeks and include a capital budget in early December.
Alward said he will introduce legislation to make it illegal for drivers to text or use hand-held devices like cellphones.
The Conservatives have 42 seats in the legislature. The Liberals hold 13.
Source: The Canadian Press