23 April 2013

Taxing the Imagination #nlpoli

What is it about the provincial Conservatives and income tax?

Kathy Dunderdale rabbited on about it last fall and again in January.

Last week, the provincial Conservatives were at it again, with a private members resolution in the House that praised the government for cutting taxes and for not raising them now that they’ve fallen on hard times.

The guy who introduced the resolution – Glen Littlejohn – stated the obvious.  About 40% of the people in his district on are fixed incomes. As we all get older, more of us will be on fixed incomes.  Regular SRBP readers have been reading this sort of thing for five or six years now. 

About 65% of the people in the province who file income tax claims report a gross annual income of less than $35,000 a year.  Lots of people take home a lot less than that.

Finance minister Jerome Kennedy talked during the debate.  He compared the Conservative approach locally – low taxes, declining and aging population – with the situation in Nova Scotia where the New Democrats are raising taxes.  Okay, he claimed the population was increasing but the long-term trends here look pretty much like they are in other parts of Atlantic Canada.

Kennedy rattled off a bunch of numbers about how many people in the province make more than $100K a year:  about 18,000.  He also talked about the 6,400 people who make more than $150,000 a year.

All wonderful stuff.

Kennedy’s message was that Conservative tax cuts and other programs have helped low income earners.  At the same time, the Conservatives have more than doubled health care spending and education spending.  The last increase came at the same time that the provincial government kept the freeze on university tuition fees.

What Kennedy does here is mix up a whole bunch of things that miss the bigger problem entirely.  He and his associates cut taxes and boosted spending because they had a raft of oil money to spend.  And spend it they did, all but a small bit of about $15.6 billion in oil and mineral royalties.

Now that the oil and mineral money is running down, Kennedy has a problem.  So what point is there in praising spending that you have already admitted is unsustainable,  i.e. unaffordable?  Good question but unfortunately there isn’t an obvious answer.

To really keep scratching your head, you have to go back and look at Kathy Dunderdale’s comments.  She wanted an “adult conservation” around the fact that most people in the province don’t pay the bulk of the personal income taxes.  Was she proposing to increase taxes again?  It certainly seemed that way.

What the personal income tax story tells us is exactly the magnitude of the financial problem the government faces.  All those people on fixed and low incomes won’t be able to afford the enormous costs of government without the sorts of oil and mineral money that the Conservatives have used to drive spending to unaffordable heights. 

On top of that you can add the apparent confusion between the Premier and at least one of her ministers over the whole income tax thing itself.

All you can do is look at the comments and scratch your head.  Trying to figure out how the Conservatives see great things in signs of the problem just taxes the imagination.