HALIFAX 鈥� Nova Scotia's Opposition and a major labour group in the province are calling for tax reform so that workers can keep more money in their pockets as they struggle with the rising cost of living.
The Nova Scotia Liberals and an Independent member of the legislature have each introduced bills to automatically adjust provincial income tax brackets to annual inflation. Tax-bracket indexing ensures that pay raises equal to the annual rise in the cost of living don't bump taxpayers into higher income tax brackets.
Indexing is in place at the federal level and in every province except Nova Scotia and Prince Edward Island.
Premier Tim Houston, however, has rejected those calls, saying there will be no major tax reform until health care is 鈥渇ixed.鈥�
鈥淭here鈥檚 a lot of work to be done in health care 鈥� there will be no changes to the tax structure until we鈥檝e moved the needle on health care in a significant way,鈥� Houston said last week after tabling his government鈥檚 second budget.
Houston's comments show that the government is "looking at things backwards," said Independent member Elizabeth Smith-McCrossin, who tabled one of the tax-indexing bills. In an interview Tuesday, she said income levels are a top determinant of people's health.
Nova Scotia Liberal Leader Zach Churchill agreed, and said in an interview Tuesday, 鈥渨hen people can鈥檛 afford to put healthy food on the table or are stressed out about their finances, people get sicker.鈥�
The province鈥檚 $14.4-billion budget allocates $6.5 billion toward health. A Finance Department official said indexing tax brackets would have deprived the government of about $125 million in revenue.
Nova Scotia NDP Leader Claudia Chender said that figure represents a fraction of the province's budget but is "a really meaningful (amount) to the people for whom it could be in their pockets."
Chender said the province's failure to index tax brackets or raise income assistance rates shows that the government 鈥渄oesn鈥檛 seem to grasp the severity of the cost-of-living crisis that people are living in.鈥�
Smith-McCrossin said that neglecting to index tax brackets for inflation is especially harmful to the lowest-income Nova Scotians because the province has a low basic personal income exemption level. In 2022, Nova Scotia permitted the least amount of income to be free from taxation compared to other provinces. Alberta had the highest exemption level that year, allowing residents to earn up to $19,369 free from provincial income tax.
Smith-McCrossin鈥檚 bill proposed raising the basic income exemption level to $12,510.
鈥淏y choosing not to index or raise basic personal tax exemption, I believe the government is actually purposely keeping people in poverty,鈥� Smith-McCrossin said.
Danny Cavanagh, president of the Nova Scotia Federation of Labour, says he is in favour of tax indexing because low- and middle-income workers are struggling with the rising cost of food, fuel and housing.
鈥淧eople are just trying to survive day by day and it鈥檚 becoming more and more difficult, especially for low-income earners and middle-class people,鈥� he said.
Cavanagh said, however, that indexing should be an interim measure and that Nova Scotia is due for significant tax reform that would place a higher tax burden on the wealthiest.
This report by The Canadian Press was first published March 28, 2023.
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This story was produced with the financial assistance of the Meta and Canadian Press 撸奶社区 Fellowship.
Lyndsay Armstrong, The Canadian Press
