Two organizations that advocate for tax fairness are slamming the P.E.I. government for what they call a sneaky tax hike this year.
© Guardian photo by Heather Taweel
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.