Greater Summerside Chamber of Commerce PRESENTATION TO THE STANDING COMMITTEE ON EDUCATION AND ECONOMIC DEVELOPMENT
Population Growth a Top Priorit y 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 4 th 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 4 th 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
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