Report raises concern over high tax rates in Nova Scotia

A new report is raising red flags about how much Nova Scotians are paying in taxes, even at modest income levels.

A new report from the Fraser Institute indicates Nova Scotians earning $50,000 a year are paying the highest provincial income tax rate in the country. It notes that the marginal tax rate on the next dollar earned at that income level is nearly 15 per cent higher than any other province.

This is “extremely important” for people to understand, Alex Whalen, Director of Atlantic Canada Prosperity with the Fraser Institute, told The Todd Veinotte Show.

Newfoundland and Labrador and Prince Edward Island follow closely behind, while New Brunswick’s rate is lower but still well above provinces like Ontario and Alberta.

“If you look out across Canada, there are provinces that have lower tax rates than we see in this part of the country,” Whalen said. “But when you broaden the analysis out to North America, there are really stark differences, and that makes a difference not only in people’s after-tax income, but it makes a difference in where people choose to locate.”

The report warns that high taxes across Atlantic Canada are discouraging work, savings, and investment and making it harder to attract professionals and entrepreneurs. Whalen said for those that don’t mind paying taxes if they receive services from the government, he said people need to look at what they’re getting.

“If you look at most provinces, healthcare and education combined for upwards of 70 per cent of provincial budgets,” Whalen said. “I think when you look at healthcare wait times in this region, you look at student performance in the government education system, I think there’s lots of data to question what we’re getting for our money.”

Fraser Institute says if the region wants to grow its economy and create jobs, it needs to reduce income taxes.

“Our government is much larger than we see across the country and that even reducing the size of government down to the national average would produce massive savings that could translate into tax relief,” Whalen said.

He did note that he wants to give the province some credit, as it has been making changes to the personal tax brackets, reducing tolls on bridges and lowering HST.

“I would say to that is that if we’re going to have meaningful and long-term tax relief, we need to rein in government spending,” Whalen said.

The study looked at tax rates from $50,000 to $300,000 and found Atlantic Canada to be “uncompetitive” at every level.