They only promised to repeal a tax hike

The New Brunswick election campaign last fall was all about cutting the gas tax. The PC promised to cut 2.5 cents a litre immediately with a 2-cent cut to follow. The Liberals promised to repeal the gas tax increase brought in by the PC government in 2002, thus cutting it by 3.8 cents a litre right away. Some independent analysts did warn the public that the Liberals simply wouldn't have enough money to deliver on their election promises, so they'd have to choose whether to raise taxes or go into deficit. But people were still ready to give the provincial Liberals a chance.

The Liberals kept their promise. As soon as the new government took power, the gas tax was cut back to 10.7 cents a litre. Several weeks afterwards, people could benefit from the unusually low prices at the pumps. But then the market price started going up, back to over $1 a litre. Does anyone still remember that we got a tax cut last fall?

Well, we're paying for it now. And I'm sure that the tax hikes from the recent budget will not be forgotten that quickly. The government has in fact repealed most the cuts to personal and small business taxes implemented by the PCs. Apart for the two highest tax brackets (which too were slightly increased), personal tax rates are now back to where they were before the New Brunswick PC came to power in 1999. Small business tax which was supposed to go down from 1.5% to 1% this July, went back to 5%. What's left is the Low Income Tax Reduction and the bracket indexation for the personal income tax as well as higher income threshold for the small businesses. The corporate tax rate will remain at 13%. It won't go down to 12% but it won't go up to 17% either. Overall, the corporations will pay $17M more in income taxes, small businesses - $35M, individuals and families - $50M more than in 2006.

Will it be the last tax hike for this term? I hope so. It became a common strategy for the majority governments to put all the unpopular measures first, saving the best for the pre-election budget. But New Brunswick also has the demographic challenge to deal with. The Self-Sufficiency Task Force calls for a population increase in order for the province's economy to catch up with the rest of Canada. So the question is what will the government do now, once New Brunswick does no longer have the lowest small business tax rate and the personal tax rates are second highest in the region. If the provincial Liberals choose to offset the population loss by simply bringing in more people from abroad (regardless of their language skills and work experience), we can expect some more tax hikes in the future.