By Mary Mosynski
As appeared on page A1
NB Power and the provincial government are preparing New Brunswickers for a pending power rate increase, likely to be in double digits, but residents are already coping with less money left in their wallets after the bills are paid.
Income tax increases, liquor price hikes, exorbitant property assessments and the cancelled HST rebate mean New Brunswickers are handing over more and more of their money to provincial and municipal coffers.
But just how much more can residents afford to pay?
Not much, says Charles Cirtwill, acting president of the Atlantic Institute for Market Studies.
“I honestly don’t see a situation where we’ve got any more room to manoeuvre,” he said, adding NBers have already reached the point where “enough is enough.”
Finance Minister Victor Boudreau acknowledged families are being hit with a number of increases adding, however, the increases are affordable.
“Unfortunately we haven’t struck oil like Alberta has and we have to live within our means. We have to be able to pay our bills at the end of the month. NB Power has to be able to pay their bills at the end of the month,” he said. “Overall, we are still competitive in the approaches we’ve taken.”
Boudreau said the province has continued to support programs to help the most vulnerable residents.
“We do realize there is a compounding effect there, there’s no question.”
Middle-class families are paying several hundred more dollars this year in taxes.
A married couple with two children, with one partner earning just over $47,000 and the other about $25,000, will have almost $700 less in disposable income that they’re used to spending each year on groceries and Christmas shopping, maybe even on pizza every Friday night.
Last year, that family would have worked 169 days for the government, paying a whopping $33,759 in taxes before they reached Tax Free Day and started working for themselves.
That number will slowly climb this year as a result of the provincial tax hikes.
And that amount doesn’t include increases in other bills such as property taxes and power rates.
Certainly many New Brunswickers will find a way to cope, regardless of any increases, whether it’s by cancelling family vacations, visiting fewer restaurants or renting fewer movies, he said.
“But the issue isn’t with the people committed to staying in New Brunswick for whatever reason; the issue is with those groups of people who are able to leave,” said Cirtwill.
“And I think if you’re talking about that group, you’ve made the case worse for them, in terms of the option between staying in New Brunswick and going elsewhere.”
A person earning $40,000 in New Brunswick pays $3,100 in income tax. The same person living in Nova Scotia would pay $3,300.
However New Brunswick isn’t competing with its neighbouring provinces, said Cirtwill. The real goal is to stop people from moving to Alberta where an individual earning $40,000 would pay $2,200 in taxes.
“From a competitive perspective, (NBers) are still marginally better than Nova Scotia but if you’re the person making $40,000 (in Alberta), you’re losing around $1,000 for the pleasure of living in New Brunswick,” he said, adding it’s “absolutely not” worth it.
“Because you’re raising costs – you’re raising the tax bases, you’re raising corporate taxes, you’re raising the cost of electricity – you’re making it less desirable for companies to come to New Brunswick which means there are fewer jobs.”
Opposition leader Jeannot Volpé also predicts the double-whammy of a small business tax increase and a possible double-digit power rate hike will lead to jobs losses.
The increases will be just as hard on families, he added. “I think there are (New Brunswickers) already over what they can afford. What will be the impact? A lot of families won’t be able to afford it.”
Residents are also bracing themselves for an electricity rate increase, rumoured to be in the double-digits.
NB Power chairman Derek Burney has said the utility needs to increase rates significantly enough to cover the utility’s increasing costs.
Premier Shawn Graham has directed the utility to break-even this fiscal year.
Volpé said NB Power should look closer at reducing costs before hitting residents with rate-shock.
“They had a surplus last year and this year,” he said of the utility.
NB Power made $96 million in 2005-06. The provincial budget, tabled last month, shows the utility made $57 million more than expected in 2006-07, leading to an $11 million surplus. NB Power’s debt is approaching $4 billion.
Energy Minister Jack Keir said the province has programs to help low-income families and struggling businesses cope with rate increases.
Although residents are already coping with increased rates and fees, the energy minister said he won’t follow in the steps of the previous Tory government and cap the rate increase.