Brian Rose
Brian Rose, Vice President
 

The recent “discovery” that Nova Scotian’s pay the most tax of anyone in Canada caused a minor tempest that seems to have been followed by our typical malaise. We at the Chamber do not share the media’s or the government’s lack of long-term interest in Nova Scotia’s tax predicament. We are damn mad and we are not going to take it any more.

A couple of points to start off this post on what I will call the “taxes are too high” series.

• Finance Minister Graham Steele was absolutely right when he pointed out that there was only one table in the entire 129-page document that indicated that we had the most expensive tax regime. How many does it take? The other tables show us second last or maybe third or fourth last. Should that make us feel better?

• He was also absolutely right in what I was sure he was thinking, even if he didn’t say it out loud, that the table that shows us last is not the ordinary measure we see which is tax paid per capita. What this table showed was what we pay divided by what we produce (nominal GDP) which sounds to me like ability to pay. We do much better on a per capita basis indicating that our small population and low GDP (read incomes for people and business) are taxed to the max in order to provide the government services that we cannot live without.

• Whether we are last or second last or fifth or second is immaterial if our competition is first. Taxes are not just annoying; they are the costs of doing business and the cost of living. The farther we are from first place is simply the degree of difficulty in being competitive. Competing on low costs is an unsustainable strategy but having uncompetitive high costs simply takes us out of the game. As Valerie Payn likes to say; “competitive taxes are table stakes”.

Here is the key point to all of this: our taxes are too high and that makes it much harder to attract and retain people and businesses to Nova Scotia.

Pretty simple right? Not really.

Saying taxes (tax rates) are too high and they should be dropped without balancing the other side of the equation (government spending) and/or the other variable in the formula (the tax base) is stupid if not negligent. What needs to happen is an increase in the tax base (incomes for people and businesses) so that a lower tax rate can produce higher taxes. I would submit that this is the intent of the provincial government’s economic strategy, jobsHere.

The conundrum in this is that we cannot attract the highly productive talent and the companies that follow and/or precede them in order to get incomes up with uncompetitive tax rates. And there is no way we would support going deeper into debt. So this means in order to balance the equation we need to support the government in its effort to cut costs from their operations so that taxes can be lowered while still maintaining deficit elimination and debt reduction as a mantra.