A Joint Letter I Coordinated

31 July 2008

To the Hon. Shawn Graham (Premier of New Brunswick) and the Hon. Victor Boudreau (Minister of Finance);

The New Brunswick Government has proposed a new tax and transfer structure for the Province involving significant change from the current system.

We, the undersigned economists from New Brunswick Universities strongly urge the Government to complete the following tasks before further consideration of such sweeping changes in provincial tax policies.

1. Conduct a comprehensive comparative examination (baseline versus variants) of the effect of the tax proposals on household disposable income using Statistics Canada’s Social Policy Simulation Database and Model which is specifically designed to test policy proposals of this nature, and to make public the results of these simulations.

2. Publish a revised version of A Discussion Paper on New Brunswick’s Tax System in such a way as to convey the combined effects of all proposed tax changes on the distribution of household income. For example, Tables 2 and 3 (p.15) and Tables 6 and 7 (p.19) discuss only personal income taxes but mention neither the HST increase, the proposed new carbon tax, nor any potential effects from changes to corporate tax rates.

3. Provide an analysis and empirical evidence from peer-reviewed sources discussing the predicted increase in the provincial tax base and provincial tax revenues resulting from the proposed tax policy changes.

4. Provide an analysis of the effect of the projected increase in the tax base upon equalization. For instance, does a $1 increase in tax revenues lead to a $1 decrease in equalization funding?

5. If analysis indicates a revenue decline, indicate how the Government proposes to deal with revenue shortfalls.

We believe that the above research will provide a clearer picture of the tax proposal and address some of the questions raised in recent public submissions.

Sincerely,

Dr. Rob Moir (Economics, UNB in Saint John; President of the Atlantic Canada Economics Association)
Dr. Rod Hill (Economics, UNB in Saint John)
Dr. Joan McFarland (Economics, Saint Thomas University)
Dr. Joe Ruggeri (Economics, UNB in Fredericton; Vaughan Chair in Regional Economics)
Professor Ron LeBlanc (Economics, Université de Moncton; Chair)
Dr. Michel Deslierres (Economics, Université de Moncton)
Dr. Stephen Law (Economics, Mount Allison University)
Dr. Andrew Secord (Economics, Saint Thomas University)
Dr. Ted McDonald (Economics, UNB in Fredericton)
Dr. Mike Farnworth (Economics, UNB in Fredericton)
Dr. Dev Gupta (Economics, Saint Thomas University)
Dr. Weiqiu Yu (Economics, UNB in Fredericton)
Dr. Tony Myatt (Economics, UNB in Fredericton)

CC : Mr. Jeannot Volpé (Leader of the Opposition), Mr. Roger Duguay (Leader of the NB NDP), Mr. Mike Milligan (Leader of the NB Green Party), Media Outlets