Download Tax Reform - Greater Summerside Chamber of Commerce

Greater Summerside
Chamber of Commerce
PRESENTATION TO THE STANDING COMMITTEE
ON EDUCATION AND ECONOMIC DEVELOPMENT
Population Growth a Top Priority

The Provincial Government has made it clear that population growth is a
priority

This aligns with the Greater Summerside Chamber of Commerce (GSSC) as
it too has highlighted population growth as a top priority because it would
increase the tax base and provide more demand for local businesses’
products and services

We will now outline what the GSCC thinks are various tax policies and
initiatives that could be used to achieve population growth and business
growth
It starts with Business Growth
In order to create jobs, businesses need to invest in growth; to invest, they need to exist in a
competitive business environment:

Small business owners (typically 1-5 employees) usually exist primarily to give themselves a
job and perhaps contribute to their community; growing the business is usually secondary

An attractive personal tax environment is key to ensuring every small business has the
opportunity to leave money in the business, thereby giving capital to grow the business


Most small business owners take a salary based on what they need; lower personal taxes
means owners need to take out lower salaries to live

Lower personal taxes also ensures employees of the business can live appropriately off a
lower wage since they have a higher percentage of after-tax dollars to take home; this
would mitigate the need for a higher minimum wage
Jobs created by growth (funded by increased capital in the business) would contribute to
population growth and inevitably gives the Province an increased tax base
Next is a focus on the Middle Class

Federal Liberals campaigned on promises to strengthen the Middle Class

Cutting the Federal middle income tax bracket (income between $44,700 and $89,401)
from 22% to 20.5%

This will be paid for by increasing the tax on income over $200,000 with a new bracket at
33% (currently, the top bracket is 29%); this top bracket is expected to affect only the
wealthiest 1% of Canadians

The reality is that the cost of living on PEI is not less than the National average; we are led
to believe there is data to support that it is significantly more expensive to live in PEI as
compared to other parts of Canada; our presentation assumes that cost of living is
average on PEI

Currently, wages for the Middle Class (skilled labour and middle class professionals) are
lower than the National average

Our provincial tax structure is not favourable for those people and families whose income
fall in the middle brackets (individuals in this bracket pay between 16% and 19% more
provincial tax in PEI than the National average
So how does PEI achieve this?

PEI should follow the Federal example as the focus needs to be on creating an
environment that is directly aligned to attracting the demographic we need
more of in PEI (middle class skilled labourers and professionals)

To make PEI more attractive, the Government needs to make tax environment
cheaper so take-home pay is competitive with the other provinces

If equal after-tax dollars stay with the employees, then the fact that wages
paid by employers in PEI are lower will not affect the standard of living of these
prospective islanders

To offset lower taxes paid by the Middle Class, PEI could add a 4th tax bracket;
currently, the highest tax bracket on PEI (the lowest threshold in the country)
starts at just under $64K. In Nova Scotia, the highest bracket is $150K and in
New Brunswick it is $130K; the 4th tax bracket in PEI could start at $100K
Other ideas / suggestions

Tax credits for investing in a local company (Community Economic
Development Program) or flow-through shares.

Tax incentives based on growth – align incentives with hiring of employees
to foster growth, making it attainable

Revisit HST 3 years later to ensure it is still aligned with PEI’s goals (i.e. look at
the list of exempt items to ensure they are appropriate)

Attract companies that charge “world rates”. Companies that export
services/knowledge could locate in PEI and charge market rates and
attract skilled professionals with market competitive salaries in a lower tax
jurisdiction, thereby putting more after-tax dollars in their pockets