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A Budget that Builds a Nova Scotian Economy for the People

March 26, 2014

4-minute read

After more than thirty years of jobless growth and growing household debt punctuated by a series of increasingly severe economic crises, September 17, 2011 marked an important turning point.  On that day, “thousands of people marched on the Financial District, then formed an encampment in Zuccotti Park, launching a movement that shifted the conversation on economic inequality.” Following the emergence of “Occupy Wall St,” similar “Occupy” movements sprang up all around the world, including here in Nova Scotia. Occupy is driven by the clear sense that it is not only possible but absolutely necessary to build an economy for the people, not for corporations and the wealthy.

Income inequality is bad for the economy, for the environment and climate change, and for democracy. CCPA has been sounding the alarms about the growing gap for a while. The Conference Board of Canada and the International Monetary Fund agree income inequality leads to slower and moreover, less sustainable forms of economic growth.

Yet the One Nova Scotia report (aka Ivany) did not flag it as a problem (it is mentioned only in a background paper).

Inequality is very real, it matters and addressing it should be a priority.

A seminal book on the effects of the growing gap between the rich and the rest of us, is the Spirit Level. It shows that the evidence is clear: a range of social problems are more common in more unequal societies including health, violence, mental illness, drug addiction, obesity, loss of community life, imprisonment, unequal opportunities, and poorer well-being for children. Moreover, these problems are common all the way up the social ladder. The average Japanese man is healthier than the richest American by many times over. Guess which society is more equal?

Inequality is so pervasive and affects the way we relate to each other. It tears at the very fabric of our society.

We can choose to do something about it now before it gets worse. Or we can continue to deal with its costly aftermath. There are at least 99 ways to start now, as the Canadian Centre for Policy Alternatives show in this year’s Alternative Federal and Nova Scotia Alternative Provincial Budgets. These are budgets for the 99%.

All of our proposals for taxation and spending intentionally connect to our goal as an organization: a country that is economically and socially just, as well as environmentally sustainable.

For a real sense of community in Nova Scotia, we must include our least fortunate citizens. If we are serious about this we need to spend money – and it is only fair that we ask Nova Scotia’s more fortunate to contribute a fair portion of their rising incomes. The richest among us have disproportionately benefited as profits increase faster than wages; real wage gains have largely been realized at the top of the pay scales; and their relative share of taxes has been reduced. The average income of the top 1% is ten times that of the average income of the 90% (almost $260,000 vs $26,000). Our budget raises the tax rate of the two top brackets by only one percentage point. We also convert federal tax deductions to provincial tax credits to ensure that more people benefit.

User fees are an example of a regressive tax, because the lower your income the larger a proportion of your income you pay. In our budget, the cost of providing these services is covered by general revenue, while we decrease fees that are for personal use for your motor vehicle, for marriage licenses, birth certificates and the like. More of our general revenue should come from a progressive income tax system based on ability to pay.

Is it fair that in Nova Scotia, the top 1% (incomes over $150,000) reported taxable capital gains of $130 million (2009), of a total of $209 million? Is it fair that they are taxed on only half their capital gains, including those made on stock options?   Most of us have no option to only report half of our income as taxable. When it comes to capital gains, shouldn’t a dollar be considered a dollar? We think so.

To move away from reliance on the problematic property tax, our Alternative Budget phases out the flow-through from property tax that goes to general revenue for the provincial government. This allows municipalities to keep more of their revenue, decrease property taxes or tackle their own needs.

We also eliminate costly tax rebates that do not meet policy goals, such as the energy rebate. Did you know that that the energy rebate of 10% cost us $110 million last year? Is it fair that everyone gets a 10% cut regardless of their ability to pay and to make their houses more energy efficient? Do landlords pass on these savings to their tenants? In the end, many Nova Scotians are still left struggling to choose between eating and heating. Taxes and tax cuts need to have clear goals. We need to confront climate change, energy security, and indeed poverty reduction, head on.

The problem of inequality requires redistributing income. It requires dealing with its effects in our society today with investments to reduce poverty, and build strong public services that help level the playing field, rebuild our connections to each other, strengthening our community. Ultimately it requires preventing harmful inequality such as building an inclusive labour market, investing in early learning and child care, as well as adult learning, and in our public infrastructure. Find out more, read the Nova Scotia Alternative Provincial Budget: a budget for the 99%.

As we approach the release of the Nova Scotia provincial budget (to be released April 3), Nova Scotians deserve to understand the range of choices facing our government. Will it be a budget for the 99%?

Christine Saulnier, PhD, is the Nova Scotia Director of the Canadian Centre for Policy Alternatives. More than 40 people contributed to the alternative provincial budget this year.

A version of this blog appeared in the Chronicle Herald.

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