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Tax fairness, austerity and the Nova Scotia elections

Group believes this is not the time to lower HST

by Robert Devet

A group of Nova Scotians argue that lowering taxes is not a good thing if public services suffer as a result and inequality in society is not addressed. Photo credit: the Stakhanovite Twins
A group of Nova Scotians argue that lowering taxes is not a good thing if public services suffer as a result and inequality in society is not addressed. Photo credit: the Stakhanovite Twins

All political parties favour lowering taxes, at least in principle. Indeed, conventional wisdom is that saying otherwise is a sure road to political oblivion.

Nova Scotians for Tax Fairness is an organization that argues things are a bit more complicated. It believes that higher taxes are not necessarily a bad thing. After all, taxes pay for public services, things like schools, hospitals and roads.

This is why the group thinks that lowering the HST, as both the NDP and the Progressive Conservatives intend to do, is premature. The group also argues that some of the current taxation practices unfairly benefit the rich and should be changed.

“The more comprehensive public services you have, the better off everybody is,” says Brian Gifford, one of the founding members of the group. “This helps people at all income levels, but it helps people at low income levels most."

"Take education for instance. If you have a real high quality education and childcare system than children of low income families have a much better chance of gaining the skills to participate fully in the economy and get good jobs.”

Education is just one example. Gifford points to universal pharmacare, a guaranteed annual income, and help for low income Nova Scotians in paying their power bills as others.

Of course, conventional wisdom tells us high taxes scare away entrepreneurs and residents alike.

Not so, says Gifford, referring to studies that show Nova Scotia as altogether competitive despite having high taxes. “People go on about taxes, the fact is that the cost of business is lower here because of the low cost of property and low rents and so on.”

No discussion on taxes would be complete without touching on deficits and balanced budgets.

Over the last four years austerity has been a recurring theme and we have seen restraint in education, health care, social services and many other programs, all so as to keep taxes low and still balance the budget.

Gifford thinks it is wrong to look at the straight dollar value of the debt. What matters is debt relative to the Gross Domestic Product (GDP), the total value of goods and services produced within a given period. GDP is used to measure a society's productivity.

“In Nova Scotia in 2000 our debt to GDP was 49%, it is now about 36%, the more the economy grows the more debt you can handle,” says Gifford, adding that current low interest rates also make the debt more manageable.

“The percentage of the Nova Scotia budget that has gone to paying down the debt every year went from a high of 19% in 2002 to just under 10%,” says Gifford. “But people are still saying we are bankrupting the province and it is just total bs.”

This election the big tax topic is the HST, in particular how the NDP raised the HST by two percentage points in its first year in government, and how it now intends to cut the HST back by one percent in both 2014 and 2015.

At a St. Mary's forum on social justice and women's equality issues Maureen MacDonald, the current minister of finance, reiterated the party's commitment to lowering the HST. She also explained how she expects to make up for the revenue loss.

“Our position is that the economy will improve, it is improving, it is a slow recovery but all the major financial institutions say Nova Scotia's economic growth will put us in the middle of the pack of provinces next year,” said MacDonald.

The Progressive Conservative party supports the HST reduction, [while] the Liberals will only commit to reducing the HST when the time is right and the revenues are there.

Gifford believes the Liberal position is the more reasonable approach. “When they cut the HST by two percentage points, that will remove over $350 million each year from government finances. That is a lot of money,” says Gifford.

Gifford and the Nova Scotians for Tax Fairness are suggesting other means as well to raise additional revenues and increase fairness.

For instance, Gifford strongly supports the fifth tax bracket introduced as a temporary measure by former finance minister Graham Steele in 2010. This bracket sees well-off Nova Scotians earning more than $150,000 pay 21% provincial income tax.

“We would like to see an additional bracket, for people earning more than $375,000 or maybe $500,000,” says Gifford. “When you get executives from Nova Scotia Power who are earning over a million dollar a year, then that's the kind of salary where it makes sense for them to contribute more to society.”

In 2012 Chris Huskilson, the head of Nova Scotia Power's parent company, earned over $3-million in salaries, stock options and bonus payments.

Only 50% of earnings from capital gains and stock options are taxed as income, something that does not sit well with Gifford. The other 50% is tax free.  Nova Scotians for Tax Fairness believe 100% of these earnings should be taxed with some exceptions.

According to this year's Alternative Budget, published by the Canadian Centre for Policy Alternatives, over 60% of capital gains go to 1% of the population. Information on stock options isn’t available, but they also tend to go to highly paid executives



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Topics: Governance
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Nova Scotians for Tax Fairness are correct

Nova Scotians for Tax Fairness are completely correct in all of the above. Debt to GDP ratio is a far better metric for measuring economic health and well being than simple levels of debt in isolation from the rest of the economic picture. In regard to the economy of Nova Scotia, this is a point that the NDP have been making, which both Liberals and Progressive Conservatives have been ignoring for the sake political expediancy and rhetoric . If we are going to manage our economies sanely we have to adopt a more sophisticated approach to economics than simple "debt."

Nova Scotians for Tax Fairness are also completely correct in advocating against cutting HST at this point in time. The $350 million that will be removed from the province's finances as a consequence,is a significant amount which could be far better employed in either program spending, debt reduction, or a combination of both. We need to start thinking about taxation as a way by which citizens invest in the strength and health of their own societies, not as a burden that should be sloughed-off whenever possible. Tax cuts are inevitably good for the rich and bad for the poor, and throughout the developed world the rich (espcially the upper 1-2%) are getting dramatically richer, the poor get poorer, and middle classes are stuck in neutral. 

It's shortsighted of both the NDP and the Progressive Conservatives to support cutting the HST. The increase of 2% that the NDP implemented upon taking office passed with little notice and no real political cost to the government. Indeed, it's scarcely noticeably at this point. In my view, cutting the HST has accrued no political benefit to the NDP in the course of the present provincial election campaign. Nor is it in the spirit of social democracy. 

At the Forum, Minister

At the Forum, Minister MacDonald pointed out that NS has the 2nd most progressive income taxes in the country, in part because of the 5th tax bracket introduced by the NDP government. as mentioned in the article.  She also pointed to reduced taxes on low income seniors, the Affordable Living Tax Credit and the Poverty Reduction Credit which made the tax system more progressive.  Increases to the minimum wage to the 2nd highest in the country and the first increases in income assistance in many years helped to lift many out of poverty.   

NSTF’s view is that the HST should not be reduced unless the revenue is replaced by other sources.  All 3 parties promise to reduce it;  the Conservatives would do it by cutting spending instead of replacing the revenue, the NDP and Liberals both bank on increasing revenue from an expanding economy with some cuts by the Liberals (eliminating local health boards).   NSTF recommends replacing the lost HST revenue by additional progressive taxation as outlined in the article – but it’s hard to generate a similar amount of revenue this way.

I think Chris is wrong to say there was no political cost to raising the HST by 2 percentage points.  It’s true it didn’t affect the government’s popularity at the time. However,  I think It’s been a factor in the current election – it was the right thing to do economically, but I think it was a problem mainly because it broke a promise not to raise taxes.  There seems to be no political cost in this election for the Liberals to say they will defer the HST decrease until there is certainty the replacement revenue is there.  

Tax Fairness?

No conversation about tax fairness is worth having if it dosn't not include the right of a person to withdraw funding from that which he/she does not agree with.  One could sight many examples of government policy that are contrary to natural human rights, which are constantly bickered about, back and forth, between government and advocacy groups.  These people, if given the option would withdraw consent to be governed in that part of their lives, and rightly so.

If a majority may rule by numbers alone, then democracy is tyranny and community is a war of all against all.  Strangely enough, this is what we observe taking place in the real world.  Propaganda driving policy.  Stockholm syndrome on a societal level.

In the article the author makes many associations that may be foreign to some.  I, for example, do not see schools as a place where children are educated, rather they are conditioned, because "school is a process of adjustment".  Instead I see schools as a place where propaganda is directed at the most vulnerable members of our society.  Regardless of whether you agree with my statement of not, no on has the right to force me to pay for a system which I believe hurts children.  But that is what government does, with your support.

In the artlicle, the author assumes that the healthcare system is the be all end all of medical care.  But what reality shows us is that it is about as far from ideal as one could get.  As a human being I value the beneficial properties of hospitals, emergeny and trauma care, but their track record of effectiveness for chronic disease is abyssmal and generally deterimental to the health of those they are trying to help.  Answer me this, why, in Nova Scotia is it illegal to intentionally give birth to a child, not under direct supervision of a government agent?  What health benefit does that equate to?  Who's interest does that serve, why and how?  Where did the government of Nova Scotia obtain the right to tell you where and in what way you may give birth?  Do you believe they have that right, for they claim it?

Another topic of interest is GDP and the Nova Scotia's for Tax Fairness's attempt to obfucate the reality of GDP.  If 1 human being gets sick, GDP goes up.  How is that a marker a the health of an economy?  GDP is not a measure of the health of anything and therefore any relationship derived from it is also not a measure of the health of an economy.  So debt to gdp ratio is a useles figure, it determines nothing. If next year our debt to GDP ratio reverses due to economic conditions, what good was last years prognostication that debt to GDP was on the good side?  It measures nothing but current conditions in an ever changing world.

While on the topic of debt, at what point did you give consent to a group of politicians to take out debts in your name?  When did you have a say in what these debts funded?  If you had the right to choose how you spent your own credit, is this how you would spend it, or would you have other plans for the proceeds of your labor, beyond war and propagandizing the innocent?

If one ignores all that was just said, there still exists the dicotomy in the minds of man between want and cost.  If you, the people living in any city, town, province, state, terretory or federal jurisdiction see it necessary to beg your 'representatives' for a service you could easily provide yourself, at a lower cost, you will find yourself between the rock of need and the hard place of government/corporate bureaucracy.  You can't have lower taxes and get the same services.  You must accept reduced standards in services, government must become more efficient (its the most inefficient) or government income must remain the same.

For some insight into how some of your tax dollars are being funneled into the corporate structure, I highly recomment  The Corporation Nation Series by Clint Richardson.
Corporation Nation 1 - http://www.youtube.com/watch?v=QkfMuvVuETQ
Corporation Nation 2 - http://www.youtube.com/watch?v=fhkWueEjewM
CAFR Schools: School Districts and the Lottery- http://www.youtube.com/watch?v=XddjM_efnmk

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