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Tax Help Plus
Roger Haineault

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The Select Committee on Tax Reform wrapped up their hearings last week. The all-party members are charged with fact finding and reporting on some potential changes to the revenue collection streams that most taxpayers contribute to. After some encouragement, I found myself offering up some thoughts to the group.

In preparing for the appearance I researched some provincial trends that I thought you might find interesting.

Of course, optics in the rear view mirror is 20/20. After all, we know where we've been. The trick of course is to determine where we will be, not next year, but five, 10, 20 and 50 years out. It's sort of like planning your first vacation south. You know its cold in February. It's warm somewhere closer to the equator. Do you stay on the continent, or head to an island? On the continent -- great! Is it directly south or is it perhaps to the southwest? South? Are we going all the way to Florida, or does South Carolina suffice? Do we fly or drive?

Anyway, you get the picture -- and that's the point. One needs to understand the big picture and then drill down using thought, research and consultation to come up with a plan. And then one needs flexibility, so that as things change or opportunities arise, one can be ready to leverage the advantage.

So as I indicated to the committee, we should be looking at the potential for legacy change in the tax system, and not just what will work for the next election. After all, parties need to govern assuming they will remain in power and then make the best decision. On the other hand, they can't handcuff the next elected government and its successors (even if they are currently the opposition). The members of the legislature have a responsibility to the residents of New Brunswick to act as responsible caretakers and planners for all of us with a stake in the future.

With this in mind, here are some statistics taken from the 2005 tax return data filed in the spring of 2006 and the census of that year.

The population of Canada on May 16, 2006 was 31.6 million people. Here in New Brunswick we were three people shy of 730,000 -- an increase of just 499 people from the May 15, 2001 census, but a loss of more than 8,000 people since 1996. Regionally Moncton had 126,000, Saint John had 122,000 and Fredericton had 86,000 people. In other words, the three southern areas comprised almost 46 per cent of the total provincial population -- and had an increase of about 12,000 people from the last census. On the other hand the population of Bathurst, Edmundston, Campbellton and Miramichi (and surrounding environs) totaled about 95,000 -- and experienced a loss of about 3,000 people.

In 2006 (for the 2005 tax year) there were 577,280 returns filed in New Brunswick. However, only 376,000 of these were taxable (which means the others either had no income, or while having a small job earned less than the available credits so that they didn't have to pay any taxes). In other words, about half of the population paid taxes. More importantly, 161,000 had pension income. Think about that for a moment. More than 40 per cent of taxpayers are in some stage of retirement. And this is just the leading edge of the baby boomers moving into the so-called golden years.

So what does this mean to the kitchen table economist? First, the province needs to attract and encourage an increase in population. Other than us re-upping for diaper duty again, the alternatives are two-fold: create enough employment to keep those we have here and recruit those who have either moved away, or never had the good fortune to come here in the first place to recognize our little piece of heaven as being a great place to live. The stark (and perhaps stork) reality is that our quality of life will diminish without more taxpayers. After all, who's going to fund the hospitals and senior care for the ever-increasing group of old-fogies arriving on the scene?

As a last thought for this morning, consider this: everyone says the new economy is going to be driven by the self-employed creating the opportunities for others. And yet there are almost 70 per cent more people nationally reporting self-employed income than in the province. The days of the large company coming in and building a factory employing thousands is gone in this part of the world. Employment, wealth and progress will be driven by the entrepreneur who creates a start-up that issues 50 T4s in his or her fifth year. These businesses are going to be in the service sector, and with the global economy they will work both here in the province and beyond our borders. And quite frankly, other than for a select few sectors -- we are not only NOT helping these people, we are impeding their success! But that's for another day.

n Roger Haineault is with Tax Help Inc. He can be reached by e-mail at roger@help4taxes.ca or by calling 855-HELP (4357). His column appears Tuesdays.