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Provincial tax review fails the Ivany test 

Proposed report will hurt, not help our province.

Aaron MacKenzie, a part-time teacher and full-time believer in trickle-up economics, stands in a suit in front of his house.
  • Aaron MacKenzie is a part-time teacher and full-time believer in trickle-up economics.

Recently, Jim Vibert, who was hired to edit the government's tax review report, wrote a Chronicle Herald editorial calling people who had concerns with it "knee-jerk tax review naysayers.” Ralph Surette asked people in his Herald editorial to "stop spewing rhetoric and digest tax report.”

Not wanting to be a naysayer, I sat down to digest the report—twice—and see if it would help Nova Scotia meet any of the goals laid out in “Now or Never,” the Ivany report's call to action to save our province.

It doesn't. There are no job targets, no ideas for improving exports, no solutions for immigration and no thought put into how the changes the tax review proposes would help or hurt the workforce.

While the title of the tax report is "Charting a Path for Growth," the variety of charts show tax deductions for people making $150,000 or more and a tax squeeze on the middle class. Trickle-down economics, or Reaganomics, doesn't work where ever it’s been tried.

It's interesting; the tax review report says taxes must be "fair,” but recommends shifting tax away from a progressive income tax to a regressive increase of the sales tax. That's the opposite of "fair.”

The report called for a carbon tax as well, and lauds British Columbia's version. In discussions with friends and family, to ensure I wasn't having a knee-jerk reaction to the tax review, it is the idea of the carbon tax that created the best debate.

You see, we want Nova Scotia to survive and thrive. And we're concerned that when we oppose measures suggested by those in power that we'll be branded as putting the "No" in Nova Scotia. So I really wanted to find one thing in the government's tax review that I could champion. Although the authors of the report said we must not "cherry-pick" recommendations, I thought I might find a diamond in the dust with the carbon tax.

The idea of the BC carbon tax is that you're taxing polluters and products to give companies a financial reason to reduce green house gas emissions, and you'd reduce income tax and corporate tax to make up for financial impact of the new tax. Like cigarette and alcohol taxes, you'd tax what you want less of. in this case - green house gas emissions.

Sadly, after researching BC's tax, I found serious flaws in the diamond that Nova Scotia's tax review neglected to mention.

1. The carbon tax was added to public services, which meant hospitals and schools paid the new tax out of their operating budget, leading to cuts.

2. The carbon tax helped the highest income earners, who don't spend all their income, far more then it helped low-income earners who received a rebate. The middle class, as always, was squeezed.

3. While the carbon tax did create an environment where good green jobs could grow, it has not reduced greenhouse gases all that much. This is partly due to who is exempt from the carbon tax: exporters of coal and natural gas, and manufacturers of cement, lime and aluminum.

4. British Columbia's carbon tax was said to be "revenue neutral" in the NS tax review. That turned out not to be true. Researcher Mark Lee, from the BC office of the Canadian Centre for Policy Alternatives, has shown that the carbon tax is actually "revenue negative"—primarily due to more and more tax cuts for corporations to keep them from cutting jobs due to the new tax. More money now goes out to offset the carbon tax then goes into government from the tax. With a deficit and debt like ours, we can't follow that route.

The Ivany report called for immediate action to move our province forward. The government's tax review report would send us backwards. 

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Vol 26, No 38
February 14, 2019

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