Death and Taxes in New Brunswick
During both the federal election campaign earlier this fall and the provincial election in 2014, we heard a lot about “asking the 1% to pay a little more” - and now it appears that “a little more” means nearly the highest personal income tax rates in the world. Only three OECD countries (Sweden, Denmark, Portugal) have a higher rate than New Brunswick for their top earners. And this is before a promised 4% federal hike takes effect - which would put the province’s top combined bracket at 58.75%. Finance Minister Melanson has said his government will look at the issue - but we were also assured during the 2014 campaign that New Brunswick’s top rate would not exceed Quebec’s, which then happened in the provincial Liberals very first government.
Hearing statements at the coffee shop such as "the government can’t take it if they don't make it" leads me to believe that people do not understand the detrimental effects that over-taxing these high-income earners has on the economy - and the New Brunswick economy can’t handle anymore of these types of policy decisions. In New Brunswick (and elsewhere) we collectively talk incessantly about needing high-paying jobs, attracting foreign investment and growing the population - but when it comes time to walk-the-walk, we are failing.
High-income earners may be convenient political targets - there aren’t that many of them and there is little public sympathy for their situation - but these are the people that sign paycheques, provide our healthcare and create amazing companies that we are proud of to claim as New Brunswick’s own. We need to be bending over backwards to get more of these people and companies here - that’s the only long-term solution to our economic woes. Increasing top tax brackets may (accountants are already busy figuring out how their clients can keep more of their money) enhance government coffers in the short-term, but it will be death for our economy in the long run.
In Fredericton, the issue is even more acute. We have a goal to be the Start-up Capital of Canada and I believe we can unquestionably get there. But what’s the point if the homeruns our ecosystem produces are incentivized to take their successful companies (and income) elsewhere? This is 2015 and we are part of a truly global economy - we can’t rely on today’s entrepreneurs to stay in New Brunswick out of loyalty or family ties like the Irvings, McCains, Ganongs and others - we have to compete, and a 58.75% tax rate does not allow us to do so.
We also have 11,000 people in the city that have self-reported they are without a family doctor. Recruitment is already a problem and we are relying more heavily than ever on New Brunswickers willing to remain here to practice (or returning from practicing elsewhere). Again, we cannot reasonably expect this to be the model moving forward. The world is looking outward and we are looking more and more inward.
I feel that more and more government, business and people are fighting over their piece of the pie and we are losing sight of the fact that we just need to bake a bigger pie. We have to do this together and high-income individuals are a key ingredient to make this happen. We must remember that many of today’s businesses can be located anywhere in the world and we aren’t making a great case that New Brunswick is the best choice with this tax situation.
At the end of the day, I think we all agree that our people are our greatest resource. Right now we are not treating our high earners like a sustainable, renewable resource and we need to think about that.
Krista Ross is CEO of the Fredericton Chamber of Commerce. With more than 950 members representing nearly 27000 employees, the Fredericton Chamber of Commerce is one of Atlantic Canada’s largest chambers of commerce. A dynamic and relevant business organization, the Fredericton Chamber of Commerce is actively engaged in policy development that affects the competitiveness of our members and of the Canadian business environment