by Kate Wright
Despite a tax hike in this year’s provincial budget, New Brunswick taxpayers still enjoy the second earliest tax freedom day in the country, a report released by the Fraser Institute found Tuesday.
Tax freedom day marks when residents begin banking their pay instead of paying the government. From gas taxes to the Canadian Pension Plan, Canadians send nearly $40,000 of their earnings to governments, which translates to working half the year for the government.
This year, June 20th is the first day of the year that Canadian taxpayers have theoretically earned enough income to fund the country’s annual tax burden. New Brunswick’s tax freedom day was June 14, second only to Alberta, which boasts the earliest tax freedom day of June 1. Newfoundlanders must wait until July 1.
Niels Veldhuis, spokesman for the Fraser Institute, said the group calculates tax freedom day every year to give taxpayers a comprehensive measure of their total tax burden. While most people know how much they pay out in income tax every year, few realize the total amount leaving their pockets. He said the exercise is eye-opening for many taxpayers.
“It allows Canadians to say, ‘I’m sending about $39,000 to Canadian governments and working for half the year – what am I getting in return,'” he said. “Then people can make a value for judgment calculation. Some will be happy with that, and some won’t be.”
New Brunswick’s tax freedom day is earlier because of things like equalization transfers. Veldhuis said provinces like Ontario have a higher tax burden because of the money they send to other provinces. While most provinces recorded a reduction of four days off last year’s score, New Brunswick’s tax date stayed the same. That’s a reflection of the provincial government’s tax hike, said Veldhuis.
The Liberals insisted they had no choice but to break an election promise by raising taxes because the former Tory government left the books in bad shape with a potential deficit of up to $400 million.
Charles Cirtwill, acting president of the Atlantic Institute for Market Studies, said New Brunswickers will likely be waiting longer next year for their tax freedom day.
Veldhuis said New Brunswick has been trying to make itself more competitive on the tax front, and this year’s tax hike threw that plan into reverse.
“We know from research done that increased tax rates produce a less vigorous economy and there’s less savings and less risk taking, things that make the economy better.”
Bruce Cran, president of the Consumers Association of Canada, said there’s little consumers can do to counteract the effects of paying high taxes.
“Unfortunately, governments aren’t that responsive,” he said.