New Brunswick Premier Blaine Higgs makes a harmonized sales tax announcement in Moncton, N.B., on July 18.Ron Ward/The Canadian Press
New Brunswick Progressive Conservative Premier Blaine Higgs hasn’t yet called a provincial election, but he’s already making campaign promises.
On Thursday, the Tory leader said that if his party is re-elected, it would cut the Harmonized Sales Tax by two percentage points, to 13 per cent, over the next two years.
With an election that must be called by Oct. 21, the party held simultaneous news conferences at four locations across the province to announce part of their platform. In Fredericton, candidate Kris Austin, who is also public safety minister, told reporters the HST cut would save the “average New Brunswicker approximately $1,000 per year.”
But at least one economist said the Tories’ promise would put the province in a “straitjacket” by hamstringing government revenues as the population ages and immigration is set to decrease.
The Tories are pledging to cut the HST by one point in 2025 and then another in 2026. Higgs told reporters in Moncton, N.B., that the HST cut, when fully implemented, would cost the province around $450 million a year. The two-point cut would bring down the HST to Ontario’s level, at 13 per cent, and be the lowest in Atlantic Canada, with Nova Scotia, Newfoundland and Labrador, and Prince Edward Island all at 15 per cent.
Richard Saillant, economist and former vice-president of Universite de Moncton, called the proposal to cut the HST “silly” and the “worst move” from a public policy standpoint.
He said he thinks Higgs is aware that the tax cut would challenge the government’s ability to pay for services. “But the temptation to get re-elected is too strong at this point. It may be a flashy measure to put forward to try to lure New Brunswickers into voting for him, but it’s a very deleterious one from a long-run, fiscal management standpoint.”
For instance, he said, New Brunswick needs money for health care and other services to help its senior population, which is at 80,000 people right now and expected to grow to 130,000 by the middle of the decade.
“As I say, it’s a starving-the-beast approach,” Saillant said about Thursday’s election promise.
As well, he said, New Brunswick’s population has been boosted in recent years by immigration. But the recent caps on temporary immigrants announced by the federal government will lead to fewer newcomers in the province — and less revenues. Cutting taxes when revenues are about to decline is not fiscally responsible, Saillant said.
The economist also questioned Higgs’s claim that the average New Brunswicker will save $1,000 per year by the HST cut. High earners, Saillant said, who spend about $200,000 on taxable goods would save about $4,000, but a lower-income person who spends about $20,000 saves $400, he said.
“The point that I’m making is that, yes, it will provide relief to New Brunswickers, but there are way more efficient means to provide relief to those who need it most,” he said. A few of the immediate measures that the government can implement to help people is an HST tax credit or an automatic cheque sent quarterly to people who earn below a certain amount, and a rent cap, the economist said.
Jill Green, Tory candidate for Fredericton North and housing minister, rejected the idea of a rent cap, saying Thursday the measure has not made a “huge impact” in provinces that have implemented one.
Saillant disagreed. When demand for housing is outstripping supply, he said, it is the role of government to put in place “aggressive and ambitious measures” with a rent cap being one of them.
Green Leader David Coon said he was “surprised” by Thursday’s announcement. The No. 1 priority for the Greens, he said, is “saving” the health-care system by spending more to recruit and retain nurses and doctors.
“That will mean we will make a generational investment,” he said. “Once that’s achieved, if there’s money available to cut the HST, well, we’d look at that.”
Liberal Leader Susan Holt called the announcement a “last ditch, desperate effort to buy the votes of New Brunswickers (because the Tories) know their time is up.”
Her team, she said, has been asking Higgs to remove tax on power bills, get rid of the provincially imposed carbon adjuster gas tax, which she said has increased prices by about four cents a litre, and implement a rent cap.
“They continue to refuse to seriously address the health-care system and the cost of living and wait until weeks before an election to dangle out a reduction in HST,” Holt said.