Rolling back wages and cutting taxes a short-sighted approach to pandemic financial crisis

The Canadian Taxpayers’ Federation, a country-wide not-for-profit, made up of indiscriminate members, recently published their submission to the Government of New Brunswick for the 2021-22 provincial budget. Included in its recommendations are broad tax reforms for individuals and corporations, and, most alarmingly, a sweeping reduction of 15 per cent of all provincial public sector workers’ wages.

The CTF’s position on public sector wages is disrespectful to the hard-working New Brunswickers who have been on the front line of the pandemic since March 2020. Referring to public sector workers as “bureaucrats” is dismissive and gives a false picture of the many, many types of front line workers in our province. What is more, all government workers are also taxpayers, and they would much prefer a wage increase to a personal income tax cut as a way to stimulate the local economy. It is also a potentially dangerous proposal. Workers’ salaries are negotiated between unions and the government. Is the CTF suggesting the government should legislate a wage decrease? That could create untold labour unrest. 

Not only are the CTF’s recommendations lacking any specifics on this proposal and seem clueless about how the tax system works, but they would also heavily benefit those with higher incomes while hundreds of thousands of middle and low-income New Brunswickers wouldn’t receive a cent from the Taxpayers Federation proposals. Those who do not need the money would receive the most, while those who most need it would not receive anything. For example:

•                     Those with incomes of $1 million and more would get a tax break of over $30,000 from the Taxpayers Federation proposal, equal to more than 3 per cent of their income.

•                     Those with incomes over $250,000 would get a tax break of over $9,400 a year from the Taxpayers Federation proposal, more than 2 per cent of their income.

•                     New Brunswickers with an average income of $42,400 would get an average tax break of no more than $390, about a dollar a day, and less than 1 per cent of their income.

•                     New Brunswickers with income of $25,000 or less would get an average tax break of no more than $83 annually, or no more than a quarter a day.

•                     Over 220,000 New Brunswickers, mostly all lower income earners in the province, and more than a third of all NB tax filers, wouldn’t receive a single cent from the CTF proposal, as they don’t have net tax payable to the province. 

This would continue the trend unearthed during the pandemic: that the wealthy continue to get richer, while workers are bearing the economic consequences of the continuing crisis1. Also, The CTF’s proposal to cut New Brunswick’s already low corporate tax rate would significantly reduce a source of revenue for the province – an unthinkable scenario as investments in front-line services are needed now more than ever.

This regressive budget submission from the CTF would negatively impact workers and the province as a whole. All major economists agree that public investments in all sectors is what is needed to recover from the pandemic. A recent report suggests the province has even failed to spend all of the untethered transfers from the federal taxpayer dollars meant to help New Brunswickers through this crisis. In our opinion, the CTF should focus more on that, rather than attacking the working class. 

Calculations are by Canadians for Tax Fairness and use New Brunswick’s income tax statistics that are published by the Canada Revenue Agency.  

Brien Watson is the President of CUPE NB and Toby Sanger is the Director of Canadians for Tax Fairness.