Spreading the pain

I already received an email this morning complaining about call for tax increases this morning in the TJ.   They seemed to have skipped right over the other ideas in the column.  Look folks, New Brunswickers pay less income tax, sales tax and gas tax than our neighbours in Nova Scotia.    Take a look – plug in your salary – at every level NBers pay less than NSers, PEIers, Manitobans, Saskers and Quebecker.  Ceteris paribus I would say great but not with a billion dollar deficit.

If you read the column I think my three main points are valid – if you spread the pain – everyone hurts a little – that seems a more fair way to look at it.  I struggle with education funding – I really do.    We (the province) spends the least per capita on post-secondary funding among the ten provinces in Canada and fourth highest for primary and secondary.  I haven’t run these numbers on a per student basis but based on what I know of the demographics we would still be last for post-secondary funding and likely closer to the top for primary and secondary education funding (we have less population between the ages of 5 and 18 so per capita funding is not the best measure).

Take Moncton for example.  In the fast growing Moncton there are at least a half dozen elementary schools that are well below capacity but people are clamouring for more schools to be built in their neighbourhoods and they are getting them.  The idea of bussing kids 10 minutes from one area of the area (the three communities) to another is outrageous to some so many schools sit half empty.  My point is that even with education funding there needs to be spending discipline.  We need to look at the spending patterns in other jurisdictions – particularly best practice areas – and find ways to adopt them here.

I think we don’t need to spend anymore dollars in the aggregate on economic development and there even may be areas where we can cut.   It’s not the amount – it’s more about efficiencies and where the money is being spent.  On economic development, I think we should be looking at a wider range of non-cash tools such as tax breaks.

I do think the province should significantly ramp up R&D funding – it should be directly tied to growth sectors of the economy and meant to leverage significant private sector dollars.  If we don’t have the private sector capacity for R&D here (as I have been told by certain industry folks) then go get it.   Google is doing R&D on energy efficiencies – let’s bring them in to partner on Bay of Fundy water as an energy source.

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10 Responses to Spreading the pain

  1. I still think the difficulty with selling the idea of sharing the pain in New Brunswick is the lack of a feeling that we’re all in this together.

    When you have such a huge disparity between rich and poor in such a small jurisdiction – the Irvings, with their family wealth of $7 billion or so roughly equal to NB’s total debt, compared to people living in shacks in the rural regions, hoping for enough to get by the next month – you have little tolerance for measures that noticeably make it hard for everyone but the rich.

    This is a fact that tax and other policies over the years have helped create, and the deficit is, and is known to be, caused not by an excess of services given to the average NBer (we *laugh* at that proposition) but rather the ongoing subsidies that produce the wealth of the wealth, and pushed the poor deeper into debt.

    Address this, and you address the deficit problem. Don’t address this, and the problem will never be solved, because the poor in NB no longer have the money to support the billionaires.

  2. Chris Baker says:

    It is always easy to say “yes” to everything – if you ignore the consequences. It is less easy to say “no” to everything – but at least you can say that you are treating everyone equally. To say “yes” to some and “no” to many, is the true challenge.

    If you rely on adhocracy (making it up as you go along), it is a sure route to perdition. If you explain your priorities, and act accordingly, you are likely to do well.

  3. richard says:

    “lack of a feeling that we’re all in this together”

    The problem there politically is not really the handful of very wealthy individuals, but the mass of middle-class persons in Fredericton and Moncton. People who are well off, and can compensate for various service cuts with their discretionary income. Those people are voters and more likely to vote. They do not want to share the pain, not do they really recognize that there is pain to share. It’s all someone else’s fault – that is their view (and yours, Mr Downes).

    “but rather the ongoing subsidies that produce the wealth of the wealth”

    That is just BS. The province is in debt because it has a revenue problem that taxing the wealthy cannot solve. Raise the taxes above the national mean and those people simply take their money and run. It would not be a problem to find buyers for a refinery.

  4. richard says:

    Here’s a great article on the structural deficit that the feds are facing and how they are likely to deal with it:

    http://worthwhile.typepad.com/worthwhile_canadian_initi/2011/02/deficit.html#more

    If Gordon is correct, then NB should gird itself for a lot more pain. Cuts to federal transfers will wipe out many of the gains in revenue made from raising corporate, income and sales taxes to previous levels. In effect we will feel more pain from our own tax increases, only to have Ottawa take away the ‘gain’. So it will be ‘more pain and no gain’ for a decade or so.

    To make matters worse, the Harperites are supposedly planning to cut federal R&D programs as a deficit-fighting measure. That would put the kibosh on attempts to get the feds to level the playing field in terms of spending more federal R&D in NB.

  5. scott says:

    New Brunswickers pay less income tax, sales tax and gas tax than our neighbours in Nova Scotia.

    It’s sad that we view the world that way. It’s no different then when Sarah Palin said “I look out my window and I see Russia and so therefore I know something about Russia.” Why is it we always default to what our neighbours are doing? What is in front of our nose? Are Nova Scotia doing such a great job of positioning themselves globally that we need to follow them? How about they follow us and the great changes to our tax code? Anyway, I think we gotta stop doing that. Competition isn’t between two provinces at the bottom of the economic barrell, it’s between other states and region states. And in order to compete, we gotta find a way to position ourselves better to the rest of the world (so investment will follow).Let’s make the maritime region into a place where waste is minimal, costs are low and taxes are next to nothing to do business. Let’s not go the other way to appease a lifestyle for ppl living of government largesse.

  6. > it has a revenue problem that taxing the wealthy cannot solve.

    One family alone has $7 billion, which is close to the size of the provincial debt. When one family alone could retire the debt, you can’t say our deficit is a problem the wealthy can’t solve.

    > Raise the taxes above the national mean and those people simply take their money and run.

    If they go anywhere else in the world, save perhaps Somalia, they’ll be paying more in taxes. It would take a huge tax increase to dislodge them, given all the advantages, insider deals, and single-vendor marketplaces they enjoy here.

    If they leave, it’s not like the forests will stop growing or the fist will disappear from the sea. The sources of NB’s wealth remain, and maybe a larger share of it can be returned to the people than has historically been the case.

    Again – I’m all for economic development. But it is my observation that the incumbent wealthy that is the major inhibitor, rather than facilitator, of economic growth.

  7. richard says:

    @Stephen Downes
    And by what bizarre taxation scheme does one implement to capture that 7 billion? It is hard to take that kind of nonsense seriously.

    “If they go anywhere else in the world”

    If the Irvings were to depart, they could just add to the investments they already no doubt have in the wealthier parts of this country. There would be no need to leave the country in order to increase their return.

    ” It would take a huge tax increase to dislodge them”

    But only a small tax increase is required for them to reduce investment here and increase investment elsewhere.

    “and maybe a larger share of it can be returned to the people”

    Maybe pigs will fly. It takes capital investment to generate jobs and industry. Where will the capital come from? Wealthy capitalists are something we need more of not less. Raising levels of taxation above the average in the rest of the country will hardly achieve that.

  8. richard says:

    “How about they follow us and the great changes to our tax code? ”

    Working really well for us so far isn’t it? If NS is well on its way to balancing its budget and we are on our way to fiscal disaster, does that not tell you something? Are you complete obtuse to the facts? Oh wait, you are a libertarian – so yes you are obtuse to the data.

  9. mikel says:

    For education, ‘per capita’ is a bit misleading. Per student is a better measure, and NB’s is virtually identical to most places, only a little higher in Nova Scotia (thanks to a vitriolic poster for that info-I know you still read this blog:) But as a percentage of the entire budget, New Brunswick is lowest, although different governments have different ways of accounting so its hard to judge exactly. But at the VERY least, provincial spending in NB is at least $2000 less than here in Waterloo.

    But as for ‘spreading the pain’, thats a good phrase. Under Graham the CBC reported that tax cuts as a percentage were MUCH more favourable to the wealthiest NBers. And of course corporations have seen even greater cuts, and yet NEW investment has been almost nil (TD Bank saw a nice cut, what new investments have you seen?).

    So it seems that the FIRST step in ‘spreading the pain’ should be to address Mr. Downes concerns. Namely, a greater increase on those who have had two years of Graham’s tax cuts. Even if you don’t make it so brutal that there is threat that they might all flee (that can be dealt with though, since many of the wealthiest are public servants or else got their wealth by government subsidies), you can at least hit the people who aren’t worried about whether they can make their mortgage payment or not.

    But given that the government still refuses to even discuss their doubling of MLA pensions, and that Alwards’ only statement about massive raises to NBPower executives is that “its bad optics” but he’ll “leave it to them”, then again, I don’t think NBers reluctance to talk about ‘sharing the pain’ should be too surprising.

  10. scott says:

    @richard
    Working really well for us so far isn’t it? If NS is well on its way to balancing its budget and we are on our way to fiscal disaster, does that not tell you something? Are you complete obtuse to the facts? Oh wait, you are a libertarian – so yes you are obtuse to the data.

    If your brother is a drunken sailor, you don’t give him booze. Anyway, it would be nice for a change if a few statist would look themselves in the mirror around here and repeat to themselves “my work just isn’t that good.” As Donald Savoie said, it’s the merry-go-round syndrome of public policy thought in NB. If first you don’t succeed. Fail, fail again. Plus, why not, we do good of hiring the same people to justifying the same poor approaches which result in failure time and time again.

    Oh btw, just to clarify, I’m a Classical Liberal not a Libertarian. There is a difference. But in order to know that you must first be able to define what a libertarian is.

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