The province of Newfoundland and Labrador isn’t in a position to reduce taxes by much right now, suggests the findings of the Independent Tax Review Committee Report released Wednesday.
Finance Minister Tom Osborne accepted the report, which considered the tax capacity of the province, taking into account issues such as competitiveness and economic impacts.
“Our government is committed to ensuring the province’s tax system is competitive and fair, and as we are able to reduce taxes we are committed to doing so,” Osborne said in a news release.
Overall, the committee found that Newfoundland and Labrador has a progressive and fair taxation system. In considering total taxation in the province, including both provincial taxes and local/municipal taxes and fees, the ITRC determined that the total tax burden in the province is generally in line with other jurisdictions.
“Based on our observations and analysis, there are three points that I would like to highlight for you,” Steve Jarrett, committee chairman and Botwood town manager, said in the report.
“First, Newfoundland and Labrador’s taxes are reasonable compared to many other parts of Canada when combined with provincial, regional and municipal taxation. Second, Newfoundland and Labrador has a fiscal challenge. We have the highest per capita net debt of any province and face continued deficits in the near-term. Given our current taxation levels, the committee feels that this can only be addressed by reducing spending. Third, the results of our survey identified that many residents of Newfoundland and Labrador seem to have little or no understanding of basic government finances although residents demand better services and expect more from Government. Taxes are an essential portion of revenues needed to provide programs and services.
In their report, the committee suggested the province is not in a position to reduce taxes significantly.
The report includes several recommendations in line with these findings:
Should government find itself in a position to reduce taxes in the future, any initial reductions should be focused on personal income tax, which would include the temporary deficit reduction levy.
If practical, government should consider ending the temporary deficit reduction levy before the end of 2019.
The province should continue efforts to broaden consumption tax bases.
Government needs to study the impact of local taxes and fees to determine the total tax burden in our province.
Over the next four to seven years, the Government of Newfoundland and Labrador must bring expenditures in line with available consistent revenue sources.
The province must encourage greater regional co-operation.
Newfoundland and Labrador should consider tax credit programs for the green economy as fiscal resources allow.
Over the next four to seven years, the payroll tax (HAPSET) exemption threshold should be increased from $1.2 million to $2.5 million.
Osborne and Jarrett are to meet with reporters this afternoon and The Telegram’s legislative reporter David Maher will have more after that event.