A few weeks ago, we offered comment on the Provincial Budget.

Indeed, we noted that according to the international accounting firm Grant Thornton, the Province was facing a potential deficit of $300 to $400 million.

Since then we have had a Federal Budget that awarded the Province of Quebec with a $2.3 billion increase in federal transfers and equalization payments. This allowed Premier Charest to announce an immediate $700 million tax cut to pump up his election platform. Instead his platform deflated.

The federal budget offered New Brunswick an additional $26 million in equalization for the fiscal year 2007-08, less than two percent of the amount directed to Quebec. Federal cabinet ministers and provincial opposition leaders have attempted to blurr the distinction between “equalization” and “transfer payments”.

• Transfer payments are paid to all ten provinces in support of health, education and social programs. They are not based on wealth.
• Equalization payments are paid to the less wealthy provinces to help them pay for services that they otherwise could not afford.

Quebec received a huge boost in equalization payments and then gave it away in tax cuts.

Clearly, they didn’t need the increase. Newfoundland and Nova Scotia were blind-sided with equalization caps and the inclusion of 50% of their resource revenues in equalization computations. Newfoundland Premier Danny Williams has gone on the warpath accusing Premier Harper of breaking the offshore accord. Some Newfounlanders are complaining that their loss of equalization funds was linked directly to the Quebec tax break.

In recent weeks, the Times & Transcript has been on a mission to create a tax revolt in New Brunswick. Property assessments have erroneously been added to the tax debate. Assessments are quite different from tax increases.

In New Brunswick, the Provincial Government assesses property value. Municipalities apply tax rates to assessed values. The only taxes collected by the Provincial Government from property are those assigned to rental properties and second residential (cottages/summer homes) properties, not principle residential properties.

There are two issues here: market value assessment should be based on sales transactions, not arbitrary value assessments and secondly, the Provincial Government should not be collecting property taxes.

Provincial taxation on rental properties is a form of double taxation. Taxation on recreational properties is a tax on families and their heritage. One of the beautiful things about New Brunswick is the fact that people come together every summer in their family cottages to celebrate their heritage. Governments that tax them out of existence will not reap the rewards of repatriation or population retention.

In New Brunswick, we have combined increases in personal and business income tax with price increases for beer, wine and liquor. We’re looking at potential increases in electric power rates and many people are facing municipal property tax increases as a result of an escalation in assessment values.

The Government is talking about “self-sufficiency” but there is no definition of self-sufficiency on the table. The concept of increased exports is counter-intuitive when applied to self-sufficiency because trade implies dependency on trading partners. If the definition of self-sufficiency is simply a detachment from equalization payments, we should be clear about it.

The issue of government bailout for the Shippigan Caisse Populaire continues to rankle. The cost is some $60 million comprised of a $31.5 million grant to cover the institution’s debt, $10 million in repayable shares (I would have thought that lost share value would be at the cost and risk of shareholders) and $18.5 million payable to the New Brunswick Deposit Insurance Corporation.

The Lord Government had guaranteed 100% of deposits in all New Brunswick credit unions. Rationale for the Shippigan bailout is that to do otherwise would have been more expensive.

That may be true but…

Credit unions provide a very valuable service in small and rural communities, especially those abandoned by our national banks. That said, they deserve regulation and oversight in much the same way as our banks. The idea that a small town credit union could be allowed to create a provincial liability in the order of $60 million is despicable. The Provincial Government must ensure that credit unions are both regulated and governed in such a way as to not cost taxpayers undue expense and hardship.

On the matter of pending NB Power rate increases and without knowing what they might be, I offer two suggestions: one, that costs of economic development investments be separated from costs of domestic power generation and two, that consumers be offered some form of energy-consumption, price-based offset that would reward them for reduced consumption.

We need to consider some revenue-generating alternatives to income taxes. Income is the money we earn. Tax on income reduces our disposable income. Sales tax is paid only when we elect to purchase something. The first is arbitrary. The second is optional except as it applies to basic necessities.

Maybe we could lower income taxes by adding a percentage point to the GST. Maybe we should be tolling our four lane highways from Amherst to Edmundston and Amherst to St. Stephen. Residents of New Brunswick could be issued a 100 kilometer a day pass to offset work-commutes. Pass-through vehicles would expand our tax-base.

One final item i.e. federal discrimination in respect to provision of 24/7 customs and security services at the Greater Moncton International Airport. A few decades ago, the federal government designated Halifax as the regional airline hub for Atlantic Canada but Moncton had other ideas.

The airport was privatized, a new terminal constructed and today it serves half a million people a year. It is not treated as an equal by our customs service. Moncton is New Brunswick’s principle airport.

Surely it qualifies for equal treatment with Halifax. Our local MPs should be all over this one.

W.E. (Bill) Belliveau is a Shediac resident and Moncton business consultant. He can be contacted at bill.bellstrategic@nb.aibn.com Atlantic Insight is a published Blog inventory of opinion articles published weekly in New Brunswick's print media as written by W.E. (Bill) Belliveau, who is a resident of Shediac, New Brunswick, and small business owner, operating his Moncton-based marketing consultancy, Bell Strategic. He can be reached by e-mail at bill.bellstrategic@nb.aibn.com