Group Calls for Indexation of N.S. Taxes


Some Nova Scotians are calling on the province to introduce a tax escalation system that exists in most other provinces to prevent inflationary income tax hikes due to concerns about the high cost of living.

Bracket indexing, which is in place at the federal level and in all provinces except Nova Scotia and Prince Edward Island, automatically adjusts income tax brackets based on inflation rate. This means that salary increases that follow the cost of living do not move taxpayers into a higher bracket.

Bill VanGorder, policy manager for the Nova Scotia chapter of the Canadian Association of Retired Persons, said in an interview Wednesday that it’s “inexcusable” for the province not to adjust tax policy. “Funding in Nova Scotia needs to be reworked,” he said.

VanGorder says taxing income without adjusting for inflation is particularly harmful to retirees who are struggling to keep pace with the rising cost of living. People who rely on indexed pension plans could see their income tax spike and people who receive government transfer payments could lose their eligibility.

“The financial security of older Canadians is really our number one concern,” VanGorder said.

Nova Scotia Finance Minister Allan MacMaster said in an interview on Tuesday that his government is not considering a change, although he understands why people are concerned about the lack of bracket indexing. of the province.

“It’s a problem and it’s a valid thing to ask,” the minister said. “But it comes at a cost, and right now we’re incurring deficit budgets, trying to fix the healthcare system. That’s our priority right now.”

Andrew Preeper, spokesman for the Department of Finance, said the department estimates the province would forgo about $125 million in tax revenue for 2022 if an escalation policy is implemented. “As well as whatever the cost of indexation for the 2023 tax year etc.,” he said in an email.

VanGorder said the minister’s response was concerning and that he would like to see the province redistribute funds instead of allowing income tax revenues to grow as tax brackets rise.

“It actually raises taxes for Nova Scotians, and (the province) doing nothing doesn’t maintain the status quo,” VanGorder said.

Philip Cross, senior fellow at the conservative-leaning Fraser Institute and former chief economic analyst at Statistics Canada, said in an interview on Tuesday that this type of tax bracket movement particularly affects low-income workers and retirees while with little impact on taxes. paid by the highest paid.

“There’s only one tax bracket for high-income people, so they won’t be affected,” Cross said. He said the lack of indexation is particularly unfair to people who depend on the government for their income.

“It’s not so much the wage earners I’m concerned about, it’s the elderly. And not just retirees, but people on the low-income GST credit who may find themselves above the threshold at which they are eligible for the low-income GST tax credit,” he said.

All Canadian provinces and territories have some form of tax indexation, except Nova Scotia and Prince Edward Island. Alberta recently reintroduced a tax indexation policy, which applies to the 2022 tax year.

This report from The Canadian Press was first published on November 2, 2022.

This story was produced with the financial assistance of Meta and the Canadian Press News Fellowship.

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