All parties should promise policies that brighten New Brunswick’s economic future

When New Brunswickers head to the polls next month, the cost of living and the state of the economy will be top of mind for many voters. While the political parties will be tempted to make large spending promises based on short-term thinking, New Brunswickers would be best served by a suite of policies that help brighten the province’s economic future over the long term.

The need for economic growth is clear. New Brunswickers trail their provincial and state counterparts to the west and to the south when it comes to incomes, often by thousands of dollars per worker per year. The province has experienced some overall growth in recent years, but the average person is not much better off, and the province’s economic growth continues to trail its peers. These sobering facts should generate a multi-partisan consensus on the need for growth. So, what does that look like?

First, all parties should commit to continuing the general direction of current fiscal policy, one that began toward the end of the Brian Gallant government and has been embraced by Premier Blaine Higgs. Simply put, control spending, balance budgets and reduce debt. In recent years, this approach has reduced government debt interest costs and created room for tax relief.

Second, cut taxes to spur growth. The average New Brunswicker faces rising costs of living, a heavy tax burden and sluggish income growth. The right mix of tax reductions can help with all three.

Indeed, economic research demonstrates that certain types of taxation are more damaging to growth than others, given the differing incentives they create to work, save and invest. New Brunswick’s pro-growth tax policy should focus on two of the most damaging forms of taxation: business taxes and personal income taxes.

High business taxes hurt the economy for multiple reasons—they create a barrier for growth of existing companies, a barrier to attracting new companies, and reduce the funds available for investment. New Brunswick’s business income tax is tied for third-highest in Canada and is among the highest in North America. Combined with the recent federal increase in the capital gains tax, high business income taxes stunt New Brunswick’s growth prospects. More competitive business tax rates should be a top priority for the next government in Fredericton.

When it comes to personal income taxes, New Brunswick’s rates are among the highest in North America across all income levels. During a time when cost of living is top of mind, taxes represent the largest expense for the average family, with personal income taxes comprising the largest share among all types of tax. High personal income taxes also reduce the incentive to work and make New Brunswick less attractive to top talent including health-care workers, entrepreneurs and innovators who create jobs and grow incomes. While New Brunswick enjoys a slight tax advantage on personal income taxes over Nova Scotia and Prince Edward Island, overall rates remain high. Clearly, the next government should reduce personal income taxes.

While there will surely be important differences among New Brunswick’s political parties this election campaign, all parties should focus on the province’s economic future. Continued fiscal restraint, debt reduction and the right kind of tax relief would generate much-needed economic growth for New Brunswickers.