Taxpayer and business federations blast P.E.I. government for tax policies

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Two organizations that advocate for tax fairness are slamming the P.E.I. government for what they call a sneaky tax hike this year.

Prince Edward Island Finance Minister Wes Sheridan. File Photo

The Canadian Taxpayers Federation and the Canadian Federation of Independent Buisness (CFIB) are upset over Finance Minister Wes Sheridan’s refusal to increase the basic personal income tax exemption.

By leaving it untouched since 2008, Islanders have been paying incrementally higher taxes every year because it doesn't increase with inflation.

"Each year you get hit with a tax increase for no reason," said Kevin Lacey, Atlantic director for the Taxpayers Federation.

The federation says a single income family with two kids that makes $60,000 a year will pay $136 more in taxes in 2014 than in 2013.

In P.E.I., the basic amount one can claim before paying tax is $7,708, which is the lowest in the country.

“This is an issue of government getting extra revenue every year on the backs of Islanders, said CFIB’s Erin McGrath-Gaudet.

“We pay a lot of taxes in this province. We’re worried about out-migration, people are heading west for higher salaries, but this is one way that we could help Islanders who are staying here.”

McGrath-Gaudet says low-income Islanders already struggling to meet their basic needs are most hurt by this issue, known as bracket creep.

Islanders earning minimum wage saw their personal income tax rate almost doubled over the last 10 years – something McGrath-Gaudet calls ‘shameful.’

“The actual impact on take-home income is greatest for those people who on the lower of the salary scale,” she said.

Opposition MLA James Aylward raised the issue in the legislature in December, asking Sheridan to commit to raising the exemption.

But Sheridan has continually refused, saying he does not believe it is the best way to help low-income Islanders, as those with higher incomes would also benefit from adjusting the tax brackets.

McGrath-Gaudet says she does not buy this argument.

“If the finance minister was really concerned that this would benefit high-income earners too much, there are other ways that he could tinker, whether it was from that surtax or creating a new tax bracket,” she said.

Both she and Lacey have been calling on the P.E.I. government to do what all but three provinces in Canada have done – take politics and budget cycles out of the equation and allow the personal tax exemption to automatically adjust to inflation.

Aylward pointed out this is what the province has done with most provincial fees and government service charges.

“They have no problem tying those fees to CPI but at the same time they don’t believe in tax fairness, they won’t give Islanders a break and tie these personal tax exemption to CPI as well.”

Aylward said he strongly believes this could not only be a measure to help low-income Islanders, but also one that could help boost the province’s economy.

“If people have more money, they’re going to either invest it or spend it.”

Sheridan has said it's an issue he won't look at until the province's budget is balanced in the 2015-16 fiscal year.

Organizations: Islanders, Canadian Federation of Independent Buisness

Geographic location: P.E.I., Canada

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Recent comments

  • don
    January 07, 2014 - 10:11

    do you really think wes or ghiz cares about what people think? you gave them the power so suffer.

  • george
    January 07, 2014 - 09:32

    you voted the dummys in pay up

  • islander
    January 07, 2014 - 09:00

    “If the finance minister was really concerned that this would benefit high-income earners too much, there are other ways that he could tinker, whether it was from that surtax or creating a new tax bracket,” she said. I have no issue with working to help lower income islanders avoid unnecessary costs (e.g. taxes) but why is that the province and islanders are so concerned about high income islanders also reaping benefits? Do these islanders not spend their (after-tax) dollars on PEI? Do they not shop in the same grocery stores? Do they not eat in island owned restaurants? Do they not fund their children's educations? Do they not buy cars, electronics, haircuts and funerals from local retailers and providers? Do they not give to local charities with those same after-tax dollars? Do they not pay their property taxes? And lastly, do they not purchase their alcohol in government run liquor stores? Where would PEI be without the (after-tax) income that these folks float in the economy? No one can tell me that they spend all their money purchasing items on ebay and amazon! Islanders and the government need to get over this belief that high-income islanders are bad people. If they were such evil people, why are most islanders telling their kids to go to school...to get a better life. Truth be known, politicians can't truly believe this, but they certainly present it to be their belief when in the press. Why are so many people going out-west to make more money and to have a better life? Teach your kids to respect success while helping those who need it. Islanders believe they are known for giving their fellow islanders a hand up, but that same belief includes that we will often reach out a hand to pull a successful islander down. This needs to stop....or opportunities outside PEI will drive more and more islanders away.