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.”
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 Adults...so instead of saying what is good for us...please start saying "I" a little more ok when you are talking about who is benefitting ok...save 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 us..so 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 it...you 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.