With HST promise, Higgs seeks a campaign about choices, not change
PC leader’s tax cut pledge was just one of many options to make life more affordable
New Brunswick Premier Blaine Higgs's promise to lower the provincial portion of the harmonized sales tax is a politically potent move and a callback to a similar Conservative commitment almost two decades ago.
The HST is the most visible of taxes. It's itemized on sales receipts we look at every day — as former prime minister Stephen Harper pointed out in 2005, when he launched his election campaign with a promise to cut the federal portion of the tax.
"This tax cut is one you will see every time you shop," Harper said.
"It is a tax cut you will experience, a tax cut that no politician will be able to take away without you noticing."
That promise helped Harper win the election, putting an end to more than 12 years of Liberal rule in Ottawa.
Higgs is hoping his commitment, made at a campaign-style Progressive Conservative Party event last week, will have the same galvanizing effect provincially.
The opposition Liberals are making "change" the theme of their lead-up to the campaign, hoping voters are fed up with inflation, health-care wait times, overstuffed classrooms and six years of PC administration.
The Tories are countering that by making the October election about a choice.
"This fall, New Brunswickers will have a choice to make, and the choices will be very different," Higgs said at last week's announcement.
"Do you want more money in your bank account? Do you want to make life more affordable?"
Of course, the choice Higgs is offering is the one he is choosing to offer voters. But there are others.
His opponent, Liberal Leader Susan Holt, has promised to take the HST off power bills.
It would save people some money, reducing tax revenue by $90 million compared to the hundreds of millions the HST reduction would cost the government.
Holt says her proposal would leave the government room to spend more on health, education and other priorities.
"We've proposed things that we know we can do while continuing to be fiscally responsible," she said last week.
Last year the federal government took the HST off new rental apartment construction, hoping to boost the housing supply and stabilize the cost of rent.
It urged provincial governments to match the move. Nova Scotia did. New Brunswick did not.
There are other potential provincial tax cuts that might do more to help people who need it the most.
The HST doesn't apply to basic groceries and to rent, so lower-income voters, who buy fewer big-ticket items and pay less HST overall, will save less from the cut.
Single New Brunswickers earning less than $21,343 pay no provincial income tax. The government could raise that threshold, exempting more people and leaving more money in their pockets.
But that wouldn't benefit all New Brunswickers, as an HST cut would.
Another choice the PCs have made is the timing of the reduction.
The government has recorded $2.4 billion in budget surpluses over the last four years.
Higgs told reporters last week that the HST reduction, once fully implemented, will deprive the provincial treasury of $450 million a year.
He said that until recently, his government couldn't be sure the big surpluses that make that reduction affordable — surpluses fuelled by unprecedented population growth — would last.
"We didn't have confidence in where it was going to land," the PC leader told reporters.
Now, he says, the windfall looks secure and predictable enough to reduce the HST.
But that will likely limit the government's ability to spend money to keep up with the very population growth providing the government with more revenue.
Last November's capital budget, for example, included just $10.2 million to start work on four new schools and two expansions of existing schools — far less than what's required to provide classroom space for the thousands of new students enrolling.
"It isn't going to completely meet all of next year's needs, in terms of new space," Education Minister Bill Hogan admitted at the time.
"It's impossible to do it all."
A lower HST rate — and $450 million less in revenue each year — would make it even more difficult.
Higgs said last week that building more new schools will be necessary but, because he won't run deficits, that may make other expenses impossible.
"Some things we can't avoid," he said.
"There will be 'must-do's, and there will be 'nice-to-do's, and it will be very important for us to prioritize going forward how we manage that."
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