As the spiked eggnog becomes a distant memory in the rear-view mirror, it’s time for the Furey government to outline a pro-taxpayer agenda that can help cure your high-tax hangover.
Taxpayers were hammered last year with the highest inflation rates in decades and soaring living costs. The best way for the government to ring in the new year is to leave more money in taxpayers’ wallets, where it belongs.
Thanks to inflation, which damaged taxpayer purchasing power, most Newfoundlanders and Labradorians were forced to make do in 2022 with the equivalent of 11 months of the wages they earned in 2021.
A huge part of the inflation squeeze has been government. Governments have profited off of inflation as taxpayers felt the pinch.
Last year alone, the Furey government brought in $231 million more than it expected in sales tax revenue due to inflation. Sales tax is charged as a percentage of the final sale price of a good or service. When prices go up, so too does sales tax revenue.
To put that into perspective, the Furey government could lower the HST by one percentage point and leave $143 million more in taxpayers’ wallets. Government revenue would still be up by nearly $90 million, but Newfoundlanders and Labradorians would have more money to spend on gas, groceries and other essentials.
To pay for even more sales tax relief, Furey could eliminate corporate welfare handouts, which cost the province over $100 million in 2022.
Another key plank in the 2023 taxpayer agenda is to extend Premier Andrew Furey’s gas tax cut for another year. In June of 2022, Furey listened to millions of hard-working taxpayers who told the government that getting to work or school was becoming unaffordable. Furey slashed the gas tax by seven cents per litre, saving the typical Newfoundland and Labrador family $275 over the course of the remainder of 2022.
Thankfully, the Furey government announced late last year that it planned to extend the gas tax cut until March 31, 2023. While an extension is welcome, it needs to be lengthened. Taxpayers need certainty in 2023, and one way the government can give it to them is to extend the gas tax cut through the end of 2023, which is exactly what the Ford government in Ontario opted to do.
It’s also time to end Furey’s pet project of taxing pop. Last September, the Furey government introduced a 20 cent per litre pop tax. But evidence from around the world has shown that these taxes just don’t work. Pepsi lovers might just turn to a cheaper generic brand. And shoppers can still get their sugar fix in a fancy frappuccino at Starbucks or through candy at the grocery store. Both items have more sugar but aren’t subject to Furey’s pop tax.
The pop tax is regressive and hits lower income taxpayers the hardest. It’s also an ineffective policy and one that should be tossed to the ash heap of history.
Finally, Furey needs to work on balancing the books. Last year’s deficit was over half a billion dollars less than the government originally projected. That’s good news. But Newfoundland and Labrador is carrying a massive debt load that’s crossed the $10 billion mark. That’s a huge number for a small province and it’s heading in the wrong direction. Furey should implement the recommendations made by the Premier’s Economic Recovery Team’s Report, which offers a path toward spending efficiencies that could swiftly balance the budget.
By cutting the sales tax, extending the gas tax cut, ending the pop tax and balancing the books, Furey can ensure that 2023 is a much friendlier year for taxpayers than the year that just finally came to a close.
Jay Goldberg is the Interim Atlantic Director at the Canadian Taxpayers Federation