Dealing with deficits
Email
Print
Letter to Editor
Share
Updated: September 02, 2009 4:34 PM
The numbers in the provincial budget are staggering.
This year, the forecast calls for a $2.8 billion deficit. Next year, it will be below $2 billion and below $1 billion the year after that.
That’s a lot of money and the implications of deficit budgets are disturbing. Eventually, the province will have to make up the shortfalls.
Normally, this is done through increased taxes, but that does not seem to be the case with this year’s budget.
The proposed harmonized sales tax is supposed to be a revenue neutral amalgamation of the provincial sales tax and the federal Goods and Services Tax. And the basic personal credit for provincial income tax will rise to $11,000 effective Jan. 1, 2010. This is a 17 per cent increase. Finance Minister Colin Hansen said the province will have the lowest personal income tax in Canada for those earning $118,000 or less.
If the province will not be able to meet its budget, then tax cuts will further limit the amount of money coming in to provincial coffers.
Without raising taxes, the only solution left is to cut expenses, which will mean a resulting cut in government funding and services.
This is already starting to happen. Arts groups around the province have already been told they will not get their share of lottery funds this year, in order to divert the money to higher priority items.
The result is a shift in the direction of the provincial government. Attempting to bring about low taxes and fewer services is not typical behaviour at the federal or provincial government levels.
Canadian governments have traditionally funded a myriad of programs with tax dollars.
Whether taxpayers will applaud a system of lower taxes for more limited services and funding is yet to be determined. Will the lower tax rates still be appreciated when well-loved programs have faced cuts or been cancelled?
v2
