Common Front for Social Justice

For Immediate Publication

June 5, 2008.


The proposed changes to our tax system will hurt workers, citizens on fixed income and those living in poverty

Our tax system is what makes our government function. Taxes pay for programs and services that benefit all citizens. Our tax system is progressive in the sense that people who earn more money pay more than those who gain less.

In the discussion paper on New Brunswick Tax System, the goal is to reduce the amount of money the province receives from our progressive tax system and transfer the burden to all citizens by increasing the consumption tax.

The Department of Finance believes that for our economy to grow, there is a need for corporations, small businesses and citizens to keep more money in their pocket. But, where is the guarantee that the pocketed money will not go for investments outside the province or the country, for out-of-province travel or for stock market investments. There are absolutely no guarantees that these "savings" will help our economy to grow significantly.

Taxes are being viewed as a burden by this government. We ask: "Why not look at taxes as an investment in our citizens? As a way to build a more just society?".

Right now, citizens have four brackets for personal income tax which bring in 31.4% of the provincial budget:

In the first proposal, two options are put forth: (1) a flat tax of 15% for everyone; (b) a 9% tax for those making less than $35,000 and a 12% tax for all the others. Both of these options will allow the people making more money to pay less taxes. This means that the notion of progressive taxation disappear. The big losers are the New Brunswickers since there will be less money for provincial programs and services.

The second proposal is to reduce the corporate income tax from 13% to either 10%, 7% or even 5%. This would also benefit only one segment of the population, that of large corporations.

The third proposal to increase the provincial portion of the HST from 8% to 10%. This would hurt workers, citizens on fixed income and people living in poverty. This tax on consumption would withdraw $250 million annually from citizen's pockets. This is a regressive tax because the rich and the poor are paying the tax level when they buy goods and services.

The fourth proposal is a carbon tax. It imposes a fee on fuel or energy sources such as heating oil, gasoline, diesel fuel, propane, natural gas and coal. Such a tax would bring $100 million dollars in yearly revenues. But it would be hard on workers who travel to work, on people in rural areas who have to travel to access health services and on all those living on a fixed-income pension. This proposal, similar to the British Columbia one, suggest that the current 2.41 cents per litre for gasoline goes up to 7.24 cents. It also proposes that the 2.76 cents per litre for home heating oil rises up to 8.27 cents by 2012.

Finally, the proposed NB Universal Child Care Benefit is a farce. Instead in investing in a comprehensive provincial public child care system, parents will receive $50 per month for each child under 6 years old.

The proposed changes to our tax system would cost the provincial budget $400 to $500 million dollars while taking out of citizen's pockets $250 million annually from HST and $100 million annually from the proposed carbon tax. These three figures indicate that there will be a net loss of $150 million dollars. Such a net loss in the provincial budget will mean reductions of services and possibly job losses.

On page 38 of the Discussion Paper, it is very interesting to read the following (our emphasis): "Managing expenditure growth, including finding greater efficiencies within the current program and departmental structure of government, would also play an important role in ensuring fiscal neutrality over the five-year implementation period. Expenditure priorities would need to be set to ensure they are well within estimated revenues, and all spending decisions would need to be made within this framework. At the same time, new efficiencies in the delivery of public services would ensure New Brunswickers receive high quality public services at competitive tax rates".

This proposed reform is a tax grab for the rich. Those who will pay the price are the workers, the citizens on fixed income and the poor.

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Information: Linda McCaustlin, Co-Chair, CFSJ - 855-7046 Auréa Cormier - 204-1134 John Gagnon - 545-0651