The Prince Edward Island government should index the basic personal tax exemption to the consumer price index, says Opposition finance critic James Aylward.
Islanders are only allowed to keep $7,708 of their income before they start paying taxes. He said this is the lowest basic personal exemption in the country.
Aylward said Thursday this amount has not changed since the Ghiz government took power in 2007.
“Meanwhile, they continue to increase the cost of fees, services, property taxes and now with the HST is coming in as well it just seems that they’re very satisfied, very content to continue to take money out of the pockets of Islanders.”
P.E.I. is also 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 every year bump more income into higher and higher tax brackets, leading to Islanders paying more taxes.
Aylward said indexing the personal exemption to CPI would help ease Islanders’ taxation burdens as they prepare to pay a new tax when the HST is implemented this spring.
“It would put a few hundred dollars back in every Islanders’ pocket and, in turn, Islanders are going to spend that money and it would help the economy,” Aylward said.
He further pointed out government has tied future provincial fee increases and property tax increases to CPI. He wonders why the personal tax exemption cannot be treated in the same manner.
Finance Minister Wes Sheridan was out of the province Thursday. But previously he has told The Guardian changes to the personal taxation formula would not happen until after the budget is balanced, which could be as late as 2016.