Taxing your way to stability

In a very un-conservative manner, the Nova Scotia Progressive Conservative government has decided that it will balance its budget on the backs of the corporations and the upper middle class.

Nova Scotia raises corporate taxes

The Nova Scotia government has chosen to largely tax its way to a balanced budget with a sweeping series of revenue measures that will add $271.4 million to the provincial treasury in the coming year.

In addition to partly rescinding its much-hyped 10 per cent personal income tax cut, the Conservative government used Thursday’s budget to hit the business sector with $17 million in additional taxes, increasing both the large corporation tax and the capital tax on financial institutions.

“This puts us at a competitive disadvantage,” said Valerie Payn, president of the Halifax Chamber of Commerce. “If a business is looking at locating here, or an existing business is looking at expanding, this a clear reason not to.

Seems like no one has bothered to inform this government that by taxing the corporations that provide valuable jobs and opportunity to average Nova Scotians, they are effectively handicapping the very industry that will eventually assist in the recovery of the province’s fortunes. When provided with the option of locating to Nova Scotia or Alberta, where do you think a large business or corporation will want to do business? Quick fact: Alberta’s corporate tax for 2005 will be 11.5% (the lowest in Canada) and will Nova Scotia’s will be 16% – you do the math.

The articles goes on to say,

Anyone earning less than $29,590 a year will not be affected by the clawback.

Those taking home between $29,590 and $59,180 will lose a portion of the tax break, while anyone with income above that threshold will lose the benefit entirely.

The Conservatives have also introduced a new high tax category at the upper end of the scale for people earning over $93,000 a year – a move that affects 18,100 people.

In this case, the government seems to value wage earners that make considerable less than what is considered average in other parts of the country. What kind of fiscal environment is this creating for skilled/educated immigrants who are considering coming to Nova Scotia? Why would anyone willingly choose to place themselves in a province with such a high tax burden? Quick Fact: Alberta has an extemely easy to understand single-rate system or flat-tax provincial income tax of 10%. Nova Scotia has a complex/confusing tax structure that taxes at three levels of income: 9.77% (0 – $29,590), 14.95% ($29,590 – $59,180), 16.67% ($59,180 and above).