Province cannot afford income tax reduction: finance minister

Teresa Wright
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Wes Sheridan, minister of fiance, energy and municipal affairs

Finance Minister Wes Sheridan says the province simply cannot afford to lower income tax increases this year in P.E.I., especially at a time when bond raters are warning provinces to balance their budgets.

Sheridan was responding to information from the Canadian Taxpayers Federation.

CTF Atlantic director Kevin Lacey says P.E.I. residents pay some of the highest rates of income tax in the country based on a sneaky tax grab from the provincial government.

“The provincial government is getting away with a sneaky tax increase each and every year because they refuse to account for inflation in the taxes we pay,” said Lacey.

P.E.I. is one of just three provinces that still do not index their tax brackets to reflect inflation, as well as increases in federal EI and CPP payroll contributions. This means increases in income necessary to keep in step with inflation will bump more income into higher and higher tax brackets, leading to Islanders paying more taxes.

This is known as bracket creep.

Despite the imminent arrival of a new tax in P.E.I. when the HST is implemented in April, Sheridan the province still can’t afford to change the way income tax is indexed.

Raising personal income tax exemptions with the cost of living and fully indexing tax brackets has a price tag of approximately $3.5 million a year.

“At this time, it’s just not realistic to look at that being a priority when we need to get a balanced budget,” Sheridan said.

“The bond raters have certainly put that very clearly to all the provinces … there’s no question that they’re watching each and every one of us with regard to our fiscal plan and ensuring that we’re moving toward that balance.”

Sheridan pointed out the other two provinces that also have this bracket creep — Nova Scotia and Manitoba — are fellow have-not provinces.

He laid part of the blame for the need of this extra income tax revenue for these provinces on Ottawa.

“The smallest provinces are all struggling because of the change in funding from Ottawa and it’s just impossible for us right now when we’re trying to reach a balanced budget to index those tax brackets right now.”

According to data from the Canadian Taxpayers Federation, an average P.E.I. family with two children and two working adults earning a combined $80,000 will pay $92 more in provincial income taxes resulting from bracket creep, $79 more in Canada Pension Plan premiums, and $70 more in Employment Insurance contributions.

The total bill for new taxes in 2013 will be $241.

Sheridan said government will look at this issue once the province has achieved a balanced budget.

But don’t expect it to be the first financial item addressed in 2015 — the year P.E.I.’s deficit is scheduled to be eliminated.

“It is one issue that is on the radar when we do get to balance. Would this be a priority spend? I question that,” Sheridan said.

“We would have to look at that. Is it the low-income brackets that should be fixed first? Should it be money into health care

and education, social services? The pressures are all there.”

Organizations: Employment Insurance

Geographic location: P.E.I., Ottawa, Nova Scotia Manitoba

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Recent comments

  • johnthames
    January 06, 2013 - 08:15

    No Wes you're wrong, the province cannot afford the Ghiz government and all its lackeys and hangers-on. You're fired Wes. Get it? You're fired!

  • Joe Blow
    January 04, 2013 - 20:25

    I am a proud Islander, but everytime Wes Sheridan opens his fat, arrogant mouth....I feel ashamed and sick to my stomach. How many lies can someone feed to the media and tried to force down Islanders throats?? This fraction of a man has told more lies and misspent more money than Islanders can imagine! He makes excuses one day for why the government can't help Islanders out, and the next day he forks over millions of dollars to a millionaire to help his business. The Millionaire doesn't need the governments money!!! If he wants to take the gamble and spend money on upgrading his should be his own money that he spends, not the hard earned tax dollars that we all pay. For Sheridan to have the arrogance and gall to tell us that we cannot afford to change the income tax rate is a lie....simple as that! Its a huge slap to our faces and massive insult to our intelligence! Islanders know better than to believe the garbage this man continues to spew and it better show at the next election too!!! The NDP or the Green Party NEED to be in power after the next election. We need it to happen so we can start looking after ALL Islanders, not just the select few that Ghiz has decided to look after. The NDP and Greens fully deserve the chance to run this province. They simply cannot do any worse than the Liberals or PC's have done in the past 30 years. PEI politics needs an overhaul and we need to get back to taking care of everybody. We need to make necessary changes so that Islanders can compete. We shouldn't be paying some of the highest taxes and electricity rates in Canada....we are a province of 150,000 people. PEI simply cannot cost that much to run. Every problem PEI has as far as finances go....can be blamed solely on Wes Sheridan and the rest of the Ghiz government for their careless spending. Islanders shouldn't have to suffer because they refuse to do the right thing and listen to the voters. I just hope that when the next election comes around that our smart Islander voters remember the mess the Liberals have made of our beautiful province and vote for a party that has ALL Islanders concerns at heart!!

    • candrayo
      January 04, 2013 - 21:58

      Wes....sometimes I think you think your name is SIMON and the average voter is around 8. FYI...we do have to be 18 to vote...hence instead of saying what is good for us...please start saying "I" a little more ok when you are talking about who is benefitting a whole lot of commenting on the obvious and then we can just commence with the issue at hand instead of continually being stuck on the fact that you believe you can convince us somehow that we are the ones to benefit. One last time...we are not that dumb. I might even respect you for a second if you at least did that 1 honest little thing. we all know who you work for..and it isnt lets just be frank about it ok. I Still do not know how none of you are not in jail....but I am voting green or ndp no matter what... and WES you can take that to the bank with the rest of your stolen bounty... on the lighter side Olive I wish you would switch sides. THEY DO NOT DESERVE YOU!!! you probably work 10x harder than the men in your office, and let's face obviously still have a heart and remember where you came from, even after joining politics. Go where you will be respected and valued... I repeat...they do not deserve you!!! Islanders deserve you and NEED someone like you.

  • empty pockets
    January 04, 2013 - 19:53

    The more taxes we pay, the less we have to spend to support local businesses and jobs. Fewer jobs = more people with not enough money for quality food = poor health = poor educational outcomes for kids living in poverty, and eventually, people living off of provincially funded social assistance. The less $$$ we have to spend = less in sales taxes collected... gov't gets it back one way or another and the people suffer.

  • Joe Blow
    January 04, 2013 - 18:28

    Wes the Cat is telling more lies is he??? Did Wes mention that maybe if the Ghiz government didnt waste tax dollars on giving loans to business buddies, that maybe PEI could afford to lower the income tax rates???If it wasn't for the needless spending by the Ghiz government, PEI would be much better off and we'd be able to avoid HST and we'd have healthcare and we'd be able to lower income tax rates....but since Ghiz and Co insist on throwing tax dollars away on things that PEI doesn't need....we are all forced to pay through the nose for the governments many many spending mistakes! Wes The Cat Sheridan can kiss my rosy red a**....the man has done nothing but lie to Islanders since he we given the role as finance minister....a role that he should have never received!

  • MikeM
    January 04, 2013 - 17:41

    Well said "merge the maritimes".

  • johnny cash
    January 04, 2013 - 16:55

    The voters can't afford any more stupid! We have to derail these fools. God i wish i had a spike to put on their rails.

  • merge the maritimes
    January 04, 2013 - 16:14

    Well, the time of reckoning is quickly approaching for the 27 MLAs in PEI. They and their predecessors have royally screwed over this island for the last 170 years. I think a fresh start is needed. Merge NB, NS and PEI into a single province with a single provincial government. Give the new legislature in Halifax or Fredericton or Charlottetown 50 MLAs total. 6 are from PEI, 30 from NS, 24 from NB (based on population). Make PEI a single regional municipality that also happens to have a single health authority and a single school board. Turf the 5,000 politically appointed civil servants in PEI, as well as the 10,000 in NS and NB. Post merit-based competitions for a new civil service of 7,500 employees for the entire Maritimes. Close the Alberton, Tyne Valley, Souris and Montague hospitals. Close at least another 2-3 high schools in PEI and more elementary and junior high schools. Stop paving and plowing and maintaining roads with fewer than a dozen people living on them. And stop spending tax money on corporate welfare. And eliminate the pension plans for all existing PEI MLAs. Cut them off at the trough. Stat.

    • Islandwoman
      January 04, 2013 - 16:54

      Or we could find someone to properly manage the hundreds of millions of dollars that come into PEI every year. The current government gives away or wastes millions of dollars to family and friends on ridiculous schemes that couldn't possibly have business cases. Lets try managing our money properly before we shut down PEI - maybe some students from UPEI could take it on as a project.

  • EducateUsWes
    January 04, 2013 - 16:01

    My husband is self-employed and in order to avoid creeping into a higher tax bracket, he closes his doors. That's what small businesses have to do. HST won't help him. And I guarantee HST won't mean businesses pass on any benefits to their employees, it's simply not the way it works, if they manage to see more money, it will go into their pockets, they're in business afterall, to make money! Sheridan's explanation of what he thinks people/businesses do to react, is pure congecture. And people who aren't in business, are none the wiser. And I for one am willing to give either the NDP or the Greens a shot for my vote in the next election, for one, things can't get worse, and two, I'd like to see what they can bring to the table. It's time to try something new folks. The best thing the Greens and the NDP will have going for them is that they are beholden to NO ONE. They will be truly grassroots and will have nothing to lose in changing some of the status quo that is running this province into the ground.

    • Holy Cow
      January 04, 2013 - 17:41

      Your first statement was like a brick to the head. Your husband closes his buisiness so he won't have to pay more tax? Man, that is warped thinking. If you are one of the people complaining that government hands out money to self employed rich people, then I suggest you are of the same stripe...closing so you don't have to pay your fair share and putting your employees on federal welfare.

  • Michael
    January 04, 2013 - 14:28

    Change the party colour in power and you change nothing. Voters demand. Politicians deliver. Voters repeat the process. It's simple math, and it costs. When it costs too much, or looks desperate, voters get suspicious and let the other guys have a chance at the spoils, until they, too, overstep their bounds. Complaining about the colour of who delivers is a waste of time. There needs to be a change in the controls on government.

    January 04, 2013 - 13:51

    I am not one to get invovled in political conversations but with this present Government it is impossible no to. Wes and Ghizzy have made a mockery of elected Government. Government is supposed to be for the people by the people. Not the Ghizzy for me and my friends attitude. To bad tar and feathering for crooks went out many years ago as i believe we have a couple of candidates who desperately need it. This beautiful Isalnd is now a financial playground for Ghiz and his back room boys and to hell with the peons.

  • SG
    January 04, 2013 - 13:16

    Today a Report stated that many Islanders can't afford heat but not only has our Government reduced the amount for that Program but they pushed it's date ahead by two weeks. I didn't know Government decided the Date as to when Winter begins on PEI. Yet they can afford a $3 million Loan for Business Owners that a Report stated would be creating 25 jobs! Given the number of Islanders who are unemployed and the number of Islanders moving West to find employment I don't feel 25 Jobs will do much to create employment. Why should Governments provide loans for anyone? Isn't that why we have Banks and Financial Institutions? Shouldn't our Government's Priority be to ensure that our Tax Paying Citizens' needs are met? However we will soon be losing one of our Oncologists and Health PEI has stated they are unable to find a replacement and Islanders may be have travel off Island for Treatment while we have the Best Cancer Centre anyone could hope for! Recently our Government stated they couldn't fund $30 thousand to maintain a Police Officer at Holland College who was instrumental in decreasing Drug Use at the College! Priorities? 2015 can't come soon enough for me! To say I am not impressed with our current Governemnt is a Huge Understatement!

  • Islandwoman
    January 04, 2013 - 12:46

    Every day we read about the ridiculous perks the ghiz liberals give themselves and the millions they give their rich friends. Practically every day we read about services being cut or decreased and now they can't "lower income tax increases" for poor and middle class island taxpayers that would cost $3.5 million a year after just giving away 3 million to a couple rich liberal friends? Is there no way we can put a stop to this? This guy wes is so far over his head its pathetic.

  • Mark
    January 04, 2013 - 11:20

    The province cannot afford an income tax reduction, but can afford to shell out 3 million dollars.

  • don
    January 04, 2013 - 11:18

    wes you are proving that there is no way you were ever born on PEI. the reason we are in the hole is due to you and your giving OUR money away if i had the power you and your gang in the house would have to pay every cent that you lot by being stupid. what a disgrace you liberals are to real islanders. not one of you has the right to call yourselves islanders. real islanders donate how many turkeys have you all donated? NONE. how many toys did you donate during xmas? NONE. why i know this as none of your faces were in the news showing that you did. but you will be happy to take a bigger pay increase in the next few months. take a pay cut of 7.5% or even better 15% cut and drive your own cars.

  • Grandmother of Many
    January 04, 2013 - 10:38

    I hate to break it to the Honorable Minister, but Islanders can't balance their budgets due to all the tax increases and bad spending habits of his Party. I know families are struggling to make ends meet, lowering lifestyles, hauling kids out of sports, buying second hand clothes, not trading cars, wearing multiple layers of clothing to keep warm because they can't afford the oil or electricity, and he has the audacity to say the government can't do what other provinces have done! It must be nice to afford to live here. I understand why our youth is heading west. I beleive by 2015, there will be a lot of businesses closed because local consumers will not be able to afford to live and shop here because of HST, increases in income tax, increases in licenses, and other tax related costs. In the meantime, we sure are being paved and moving a lot of earth. I wonder how much comfort the majority of Islanders feel from the decisions being made. Not this grandmother, for sure.

  • WES SAYS......
    January 04, 2013 - 10:36

    "there’s no question that they’re watching each and every one of us with regard to our fiscal plan and ensuring that we’re moving toward that balance.” come on wes...nobody is "really" watching our government cause if they were, you would all be in jail but don't worry, I think this government has finally woken up a few sleeping voters...CANT WAIT!!!

    • Lola
      January 04, 2013 - 11:04

      Sleeping voters are not the only ones opening their eyes. I APOLOGIZE for voting LIBERAL....from the bottom of my heart to all Islanders. Sincerely....I will not happen again. And thankfully, I AM NOT ALONE.

    January 04, 2013 - 10:28

    No WES....the PROVINCE can not afford YOU!!! or anyone else in "YOUR" Government call a spade a spade ashamed to be from Kensington

  • oh yes the guys in ottawa screwed us
    January 04, 2013 - 10:26

    Oh yea, Ottawa offered an Immigration Program which we violated for our own 500 million bonanza on friends, and now Nobody in Ottawa could care less about PEI. We are not a have not Province when it comes to corruption and our world wide reputation is known as crooks, and certainly in Ottawa.

    • soon to be ex islander
      January 05, 2013 - 12:47

      pnp is the only way the liberals got back in they bought mass votes with immigrant money just before the election plain and simple and the last time they were in power before that was corrupt as well stealing money look to nthe past on both partys come next election and you will see the all the corruption ... my wife and i have pretty good jobs and yet we can barely make it here with the ever increasing fees taxes and other crap descisions from our government and so we are deciding weather or not to move off our homeland is the best choice for our family and its looking that way so i say to you all dont get caught behind the 8 ball and take control of your own lives instead of letting these crooks controll it... this is why im am thinking of leaving this beautifull province with my tax money and votes coming with me... alberta has no sales tax and the cost of living is a hell of alot cheaper than pei

  • Shake Your Head Sherrif of Nottingham - I mean Mr Sheridan
    January 04, 2013 - 10:20

    Does the Province think that the general population can not do math? Why not create a new Provincial Income Tax Bracket for on a personal income amount over $75,000 /year at 20%? This would allow the tax rate of the lower brackets to be decreased to help those who actually need help. We need a ROBIN HOOD. Prince John (Premier Ghiz) and the Sherrif of Nottingham (Wes Sheridan) are going to take care of their own and bleed the rest of us dry. Who is going to get some numbers together and show that these politicians need a lesson in math?

    • LOL
      January 04, 2013 - 10:43

      Thank ................ they can't take away our sense of humor. and thankfully....some of us still have one left. It is not hard to tell what this government thinks of the Island intelligence. Too bad they didn't have any on their team.

  • Donnie
    January 04, 2013 - 10:10

    The province can't afford to do stupid, useless infrastructure projects either but that doesn't stop them.....