Is it Finally Time to Reduce Income Tax Rates?

[q12]

With record population growth in Halifax and all of Nova Scotia, isn't it time we reduce the high income tax rates in this province (especially the under 60,000/year tax brackets). These new residents are adding to the provinces coffers through new income tax collected.

Nova Scotia's current population estimate: 1,028,535

[Drybrain]

Originally Posted by q12

With record population growth in Halifax and all of Nova Scotia, isn't it time we reduce the high income tax rates in this province (especially the under 60,000/year tax brackets). These new residents are adding to the provinces coffers through new income tax collected.

Nova Scotia's current population estimate: 1,028,535

I've thought of this recently. I wouldn't be gung-ho on big tax cuts (we need money to spend on transport, housing, and more) but a modest cut in lower tax brackets would be very well-received, and could be positioned as a progressive move--i.e., it would primarily benefit those most in need, but there would be some benefit for everyone.

[someone123]

I think it's less about population per se and more about structural costs relative to the tax base. In theory, newcomers should be more economically productive on average and moving to places where the service costs are lower so over time maybe the structural issues in NS will improve.

There is an aspect of economic competitiveness in Canada and anywhere that workers and capital can move to. The tax rates in NS encourage people to spend their working years paying income tax somewhere else then move to NS in retirement when their taxable income is lower and they use more provincial services. NS is stuck dealing with this, good or bad (maybe the right answer is higher taxes and services across the board but it's not happening in Western Canada), and should be responsive to this overall environment. I think the way this has worked out in the past is that NS is a relatively nice place to live so people just put up with lower disposable incomes, much like BC vs. Alberta.

[Keith P.]

The income tax system, particularly in NS, needs major reform. The Province does not index its income tax brackets according to inflation like most if not all other provinces do, so every year, more and more people move into a higher bracket without any actual change in their lifestyle. This has been an example of opportunism at its worst. Given the insatiable thirst for extra revenue that govts all have in order to spend wastefully, it is something that only public pressure can change.

Federally the system is broken too. Not everything needs to be means-tested; a medical expense is a medical expense regardless of whether you make $40K a year or $400K. They should all be equally deductible. All sorts of other deductions fall into this category and need to be reformed. The entire system needs to be simplified and stripped-down to make it more transparent and equitable for singles, retirees and others who currently get virtually no breaks from govt and pay through the nose.

[terrynorthend]

Originally Posted by q12

Nova Scotia's current population estimate: 1,028,535

Wow! That's up from hitting 1 million just at the beginning of the year? Probably safe to assume 20k of that Probably landed in the Halifax region

[YOWetal]

Originally Posted by Keith P.

The income tax system, particularly in NS, needs major reform. The Province does not index its income tax brackets according to inflation like most if not all other provinces do, so every year, more and more people move into a higher bracket without any actual change in their lifestyle. This has been an example of opportunism at its worst. Given the insatiable thirst for extra revenue that govts all have in order to spend wastefully, it is something that only public pressure can change.

Federally the system is broken too. Not everything needs to be means-tested; a medical expense is a medical expense regardless of whether you make $40K a year or $400K. They should all be equally deductible. All sorts of other deductions fall into this category and need to be reformed. The entire system needs to be simplified and stripped-down to make it more transparent and equitable for singles, retirees and others who currently get virtually no breaks from govt and pay through the nose.

Reform is needed but it's a zero sum game. We aren't a colony sending our taxes abroad. We need what we need. People are clamoring for more health c are spending for example.

If you want higher earners singles and retirees (and the last one I severely doubt is disadvantaged) to pay less you are asking lower earning couples and families to pay more. Not sure what kind of society that would be but it certainly isn't a likely democratic outcome. Only retirees are an effective voting block. Which is why they can split income and have other tax benefits.

[Keith P.]

"We" do not need all of the wasteful spending that the Feds throw around like so much penny candy every year. And of course a part of that is indeed given away to countries (or groups within Canada) that have their hands out permanently. Income splitting is something that discriminates against those who do not have a spouse and hence should be eliminated. If you are going to tax households at a lower rate because they are occupied by a married couple, tax all households at that lower rate and stop picking winners and losers.

[q12]

Nova Scotia received $2 Billion in extra revenue thanks to mostly new Metro Halifax residents the city has added.

How about cut some taxes or start spending them where the population is growing the most with some adequate transit and road infrastructure to and from the Peninsula.

Where is the $2 Billion, and why are we still paying high taxes that we paid when the province wasn't growing like crazy a decade ago?

Halifax expected to hit half a million residents this year

Services, facilities aren't keeping up with growing population, civic leaders say

Haley Ryan · CBC News · Posted: Nov 08, 2023 8:38 PM AST | Last Updated: November 8

Nova Scotia's population is continuing to climb, but municipal leaders say more money is needed to close an infrastructure gap that's holding back housing and healthy growth.

On Wednesday, Halifax Mayor Mike Savage said upcoming Statistics Canada numbers will show that Nova Scotia's population rose by 33,249 people this year. If the current trend continues, Savage said about 80 per cent of those people will be in Halifax — pushing the city past 500,000.

This year, the province of Nova Scotia saw an unexpected $2 billion in extra revenue largely tied to a growing tax base, while Savage noted Halifax's revenue jumped about $54 million.

https://www.cbc.ca/news/canada/nova-...year-1.7022915

[OldDartmouthMark]

All those new residents are going to require healthcare at some point, putting additional strain on an already overwhelmed healthcare system. Put the $2B into fixing this situation with an understanding that requirements will continue to grow…

They are not even close to meeting the needs of the population yet, and we are still growing.

[HarbingerDe]

I say index the tax brackets to inflation so that it is at least not a problem that continually gets worse year after year.

But I'd prefer the additional revenue just be used to develop more/better public transit, better healthcare infrastructure, a third bridge, etc.

[Nouvellecosse]

There's a lot of important stuff that we want from both provincial and municipal governments and they all too often can't afford it. If inflation is a way that governments can raise additional tax revenue without having to officially increase taxes (and all the political baggage that comes with it) then that's great. Inflation is actually doing something useful.

[Keith P.]

Originally Posted by Nouvellecosse

There's a lot of important stuff that we want from both provincial and municipal governments and they all too often can't afford it. If inflation is a way that governments can raise additional tax revenue without having to officially increase taxes (and all the political baggage that comes with it) then that's great. Inflation is actually doing something useful.

That's frankly absurd. I can recognize that my taxes go up every year, but I do not see any benefit accruing to me or those around me. Given more money to spend, govt will spend it. What they spend it on is the question, because it is often totally wasteful, going to lavish public sector union contracts, bloated bureaucracies that do very little, handouts to hot-button groups claiming they are disadvantaged, and dubious infrastructure projects that far too often are simply monuments to politicians but not wanted by the public who are paying for it, while other needs go unaddressed. Pouring more money into the bottomless pit that is healthcare without any recognition that the system as designed does not work close to well without any appetite to chase down and remove the money sinks in the system does little for the public. We need to remove the disease that is the insatiable thirst for revenue by govts from the system, and the best way to do that is by cutting taxes substantially and forcing govts to make actual hard decisions about what is important and what needs to be jettisoned.

[someone123]

It's hard to say much in the abstract about spending priorities. A lot of things would be nice.

One question to ask is how NS debt servicing costs will look years into the future at current rates. $2B is a good chunk of the provincial debt, and the savings in debt servicing can be used for other things like service improvements and tax cuts.

I wonder how much of this $2B will be recurring versus a one-off. I'd guess it's recurring, but on the flip side it's partly due to structurally lower spending than what is required for the new population (but the new population will require less spending on average due to demographics and where they live).

At this pace if the province plays its cards right it could have very solid finances in just a few years. IMO the difference between the stereotypical "have-not" NS and NS as a top performer with great finances mostly comes down to provincial planning and management at this point.

[Keith P.]

When the provincial debt eventually gets refinanced at today’s much higher interest rates any savings will be vaporized.

[OldDartmouthMark]

Originally Posted by Keith P.

Pouring more money into the bottomless pit that is healthcare without any recognition that the system as designed does not work close to well without any appetite to chase down and remove the money sinks in the system does little for the public.

The system obviously needs work, but it also needs money.

Not sure if you've had to visit an ER or get a new family doctor lately, but the system is pretty much broken, especially compared to how it was just 20 years ago. Even with supposedly 'better' demographics, increasing population equals increased demand. Just do whatever it takes to fix it.

[Keith P.]

Originally Posted by OldDartmouthMark

The system obviously needs work, but it also needs money.

Not sure if you've had to visit an ER or get a new family doctor lately, but the system is pretty much broken, especially compared to how it was just 20 years ago. Even with supposedly 'better' demographics, increasing population equals increased demand. Just do whatever it takes to fix it.

Throwing money at it does nothing except to burn that money.

There are no magic answers because the problem is complex, from they way family doctors work as private businesses on a piecework compensation scheme and not as employees of those who are paying them, to the way referrals and test requisitions are handed out without oversight. Everything is inefficient to the Nth degree. Those who have found loopholes in the system are raking in the dough,

[Dartguard]

Originally Posted by OldDartmouthMark

The system obviously needs work, but it also needs money.

Not sure if you've had to visit an ER or get a new family doctor lately, but the system is pretty much broken, especially compared to how it was just 20 years ago. Even with supposedly 'better' demographics, increasing population equals increased demand. Just do whatever it takes to fix it.

As I have commented here a couple of times my Brother works as an ICU doctor in the system and is a full Professor of Anesthesiology at Dalhousie.
He was educated at Harvard and trained at Mass General but has been home for about 30 years. He does not suffer fools and is quite frankly a pain in the ass to his bosses and students. I call him Lord Vader as I have literally seen his coworkers stop breathing when he gives them that look.His students have said he is the toughest Teacher they ever came across but also the Doctor they want working on their own Family.

In his estimation the greatest problem is the choice of Rural based Doctors and bureaucrats suddenly having the responsibility's of the only tier 5 Trauma center, teaching hospital and the Medium sized City beds of a much larger Community. Our Primarily Rural Politicians will try to solve problems they way they got elected. Work a room and try to solve little fires and punt the bigger stuff down the road.

That is however,what USED to happen. My Brother has no time for any Politician but he does give credit to the present government. He has never seen in 25 years a Government that is willing to experiment and truly plan beyond the four year mandate like Houston is attempting to do.The head Bureaucrat is a former Manager of the Port of Halifax and the Premier of course is an accountant. They are bringing a business sense and planning experience, and more importantly expectations, to the Provinces business, which for the most part is delivering healthcare. Time will tell but I think its a good sign that they broke up the new QE 2 into smaller more flexible projects that will incorporate the recent and planned population growth. If you publically state you want 2 Million people you better prepare.

[someone123]

Originally Posted by Keith P.

When the provincial debt eventually gets refinanced at today’s much higher interest rates any savings will be vaporized.

This may be true but if so that's all the more reason to pay off as much debt as possible so it doesn't need to be refinanced at these higher rates.

I don't have really strong opinions about the latest provincial government in NS but it does seem a bit more innovative than older governments. It is disappointing that they haven't explicitly funded any major transit developments yet. It is critical to get the ball rolling on some of these as the city is growing so quickly.

Healthcare is a total disaster in BC too and seems inefficient, not just starved of cash, although there have been some improvements. A lot of things that didn't require being in person were replaced with phone or online options during the pandemic. But that makes you wonder why it didn't happen earlier. Aside from the billing issues and lack of hospital space and so on there doesn't seem to be enough training (or maybe too many leave Canada after being trained as doctors or nurses). There have been decades of low enrolments at the universities. Around here I still know a lot of people with no primary care options who sometimes go to the ER unnecessarily and of course the ER gets swamped.

Immigration will increase demands on healthcare but the healthcare demand is dramatically different across demographics and immigrants are generally screened for health issues. A screened 27 year old professional immigrating to Canada will have a tiny fraction of the healthcare needs of an average 78 year old already in NS. Migration will likely dramatically increase government revenues per unit of healthcare demand in the medium term.

[OldDartmouthMark]

Originally Posted by Keith P.

Throwing money at it does nothing except to burn that money.

There are no magic answers because the problem is complex, from they way family doctors work as private businesses on a piecework compensation scheme and not as employees of those who are paying them, to the way referrals and test requisitions are handed out without oversight. Everything is inefficient to the Nth degree. Those who have found loopholes in the system are raking in the dough,

You did see where I said that the system needs work, right? I would surprised if we can double the population without spending more on the healthcare system… I’d love to see somebody pull that off, but I don’t see it happening.

Regardless, the assertion was that we need a tax break, and while it would be nice to have more money to spend personally, I see the province as being behind on a number of things, healthcare being but one of them. Paying down provincial debt would be another. Transit, infrastructure, housing, etc etc. Not our decision to make, anyhow. I’m sure our premier has lots of ideas, though, and I’m comfortable leaving it in his hands. FWIW, it would be nice if we could have a version of him at the federal level.

[OldDartmouthMark]

Originally Posted by Dartguard

As I have commented here a couple of times my Brother works as an ICU doctor in the system and is a full Professor of Anesthesiology at Dalhousie.
He was educated at Harvard and trained at Mass General but has been home for about 30 years. He does not suffer fools and is quite frankly a pain in the ass to his bosses and students. I call him Lord Vader as I have literally seen his coworkers stop breathing when he gives them that look.His students have said he is the toughest Teacher they ever came across but also the Doctor they want working on their own Family.

In his estimation the greatest problem is the choice of Rural based Doctors and bureaucrats suddenly having the responsibility's of the only tier 5 Trauma center, teaching hospital and the Medium sized City beds of a much larger Community. Our Primarily Rural Politicians will try to solve problems they way they got elected. Work a room and try to solve little fires and punt the bigger stuff down the road.

That is however,what USED to happen. My Brother has no time for any Politician but he does give credit to the present government. He has never seen in 25 years a Government that is willing to experiment and truly plan beyond the four year mandate like Houston is attempting to do.The head Bureaucrat is a former Manager of the Port of Halifax and the Premier of course is an accountant. They are bringing a business sense and planning experience, and more importantly expectations, to the Provinces business, which for the most part is delivering healthcare. Time will tell but I think its a good sign that they broke up the new QE 2 into smaller more flexible projects that will incorporate the recent and planned population growth. If you publically state you want 2 Million people you better prepare.

As I stated above, Premier Houston gives me more confidence than anybody we've had in office for a long time, that something will be done with healthcare (and other issues). He appears to be more pragmatic and competent than the majority of politicians, so IMHO we can be hopeful.

As you say, time will tell.