Halifax – Nova Scotia Finance Minister Peter Christie calls it a good news budget. But if this is a good news budget, why is Nova Scotia expected to post the worst economic growth in Atlantic Canada, and expected to lag behind the national average by 23 per cent this year?
“Nova Scotia needs to learn from the successful formula other jurisdictions have used to turn their economies around. Lower taxes plus less spending equals economic growth and fiscal health,” says Bruce Winchester, AIMS’ Director of Research Services. (To read the complete commentary on the Nova Scotia budget, click here.)
For six years, the Nova Scotia government has presented a balanced budget. Yet in those same six years, the provincial debt has increased by $1.2 billion. That means the per capita debt has increased to $13,302 for every man, woman and child in Nova Scotia.
In February, AIMS released an evaluation of provincial finances prepared by UNB economics professor David Murrell. In that paper, entitled “Could Do Better”, Nova Scotia earned a C grade, largely as a result of backtracking on personal income tax cuts, increasing business taxes and hiking per capita program spending.
In today’s budget, the government appears to have seen the error of its ways and announced business tax cuts, but it’s too small and too slow. That one-year tax hike, will take four years to undo. Even then, this province cannot compete for business with such provinces as Prince Edward Island, British Columbia or Newfoundland and Labrador that offer business capital tax rates of zero.
There was no relief for working Nova Scotians, who continue to pay among the highest personal income taxes in the country. Nova Scotia needs to cut those taxes to keep and attract people and jobs.
The six per cent increase in education spending and the seven per cent increase for health care may sound good, but without the right economic foundation it puts Nova Scotia’s fiscal health in peril.
“The way ahead will require much slower growth in spending, prudent tax cuts, long-term debt repayment,” says Winchester. “Until the Nova Scotia government adopts this formula, the good news will be short-lived.”
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For more information contact:
Barbara Pike, Director of Communications – 902-452-1172
Bruce Winchester, Director of Research Services – 613-276-8830