By Quentin Casey
As appeared on page A1
Despite a number of high-profile announcements that appear set to lighten wallets and purses across the province, the average New Brunswicker won’t have to shell out significantly more to the government in 2007, says a Mount Allison University economist.
By all appearances the past few weeks have not been easy on bank accounts.
In their first budget, the Liberal government increased taxes across-the-board. And most recently, NB Power requested an electricity rate hike of nearly 10 per cent.
But upon closer examination, it’s not nearly as bad as it seems, says Craig Brett, research chair in Canadian public policy at Mount Allison University.
Brett crunched numbers in five main categories Monday.
First up, potential power rates increases.
NB Power has asked for a 9.6 per cent increase, to come as early as June. Based on a theoretical bill of $200 a month, or $2,400 a year, that means an annual jump of about $230.
Next up: personal income tax.
In his first budget, Finance Minister Victor Boudreau said the government’s hike in personal income tax would only represent an additional $72 for a single person with a taxable income of $30,000. That number drops to $42 for a one-earner family with $40,000 coming in each year.
And thirdly, who could forget property taxes?
The average property assessment has jumped eight per cent across the province this year. Using a $100,000 house as an example, Brett calculated the yearly jump in tax to be around $136.
But there are a couple of items that play to the favour of New Brunswickers and their take-home income.
Upon taking office, the Liberals eliminated the 3.8-cents per litre excise tax on gasoline.
Based on weekly gas spending of $50, or $2,500 a year, that equals around $85 in savings a year.
Plus, the Liberals have claimed victory in the battle against high auto insurance rates by reducing payments by about 13 per cent.
With a car insurance bill of $1,000 the change will mean $130 to spend elsewhere.
According to Brett’s number crunching, the average family would end up paying about $225 extra in 2007 over last year. That represents only about a 0.5 per cent increase on an income of $50,000 – far less than the two per cent rate of general inflation.
“Your bottom line is not that different once you take the pluses and minuses. It’s the stuff we’re leaving out that is actually growing faster in price,” he said, referring to things such as housing, food and consumer items.
“There hasn’t been that much of a difference. It’s the not so news-worthy pocket book items (that have increased).”
Yet there has been the perception that New Brunswickers are going to be walloped this year by the bevy of increases. That has much to do with how prominent the item is in the public eye, or if it becomes an election issue, says Brett.
“Some of these things are more visible,” he notes, pointing directly to the price of gas.
“We talk about two cents a litre being a big increase in price, but that’s a dollar a week when you think about it. For some people who do a lot of driving it’s a bigger deal. But for most people it’s not as big a factor as it seems.
“The price of broccoli goes up by 20 per cent and nobody notices.”
But the minor increases will damage the province’s economy over the long-term, says Charles Cirtwill, acting president of the Atlantic Institute for Market Studies, a think tank based in Halifax.
“You remember the story of a death by 1,000 cuts. The first little cut didn’t hurt and the second little cut didn’t hurt, but by the time you get to five or 10 of these you’re bleeding from a lot of difference spots. That’s going to have a long-term negative effect,” he said.
“(Brett) probably has it right. When you look at the overall net impact I would suspect that it’s not hurting each individual New Brunswicker all that much. But the point is, it’s hurting each and every New Brunswicker a little bit and it’s sending a message to people outside the province that it’s going to hurt to come here. That opposes the message the government is trying to send – that it’s a good place to come.
“Yes, maybe it’s only $200 per person, but it’s $200 this year, next year and every year.”