New Brunswick; progressive and broken

Maclean’s recently published an article entitled, “Can anything save New Brunswick?” The article describes the demise of what was once a bustling province and it explores some of the numerous factors that contributed to its demise.

With that in mind I thought it would be interesting to dig back through the research I did for my book, “For the Love of Alberta” to see how New Brunswick compares to the rest of the country on those economic indicators that I considered in the book. Just how progressive is New Brunswick? Could it be that economic policy is a contributing factor to that province’s demise?

Quick note: Some of these numbers are outdated. Since I originally published my book it would seem a number of tax structures across the country have changed. Apparently I need to update my book…

Let’s start with taxes. The average provincial tax rate on the lowest tax bracket (across all Canadian provinces) is 9.4% and the province of New Brunswick taxes people in the lowest tax bracket at 9.7%. Pretty close to average, but a little higher.

The tax rate on the highest income earners is 16.7% across Canada, and New Brunswick – based on the data I had at the time – was slightly higher at 17.8%. It is now over 20%.

The tax spread (which I hypothesize is a significant contributor to the economic well-being of any economy) is about 7.3% across all Canadian provinces, and New Brunswick used to come in at 8.2% tax spread. It’s now over 10% tax spread. Again, higher than the average across provinces.

Here are a few other measures, briefly summarized. Some of this data might also be old, but it still reveals a general trend.

  • Corporate tax, lowest bracket (small businesses): 3.6% average, 4.5% N.B.
  • Corporate tax, highest bracket (large businesses): 12.6% average, 12.0% N.B.
  • Sales tax: 7.3% average, 8.0% N.B.
  • Minimum wage: $10.4/hr average, $10.3/hr N.B.

In summary, New Brunswick is clearly a relatively “progressive” province when it comes to their economic policies, and recent changes have made them even more economically progressive. Compared to Canada as a whole (which is generally progressive) New Brunswick is either very close to average or more progressive than average according to a variety of economic measures.

When it comes to progressivism, however, being above average is not something to strive for.

As I suggest in my book, tax policy is far from the one and only factor that determines the success of any given society. The article at Maclean’s does a fine job of describing many of the factors that have contributed to the demise of the province, and clearly some of those factors (e.g., linguistic wars fought in courts) have nothing to do with the tax structure of the province. And yet they have successfully dragged the province down from its prior lofty status among Canadian provinces.

So to answer the question, “Can anything save New Brunswick?” I think it’s clear that the path to recovery is long and multi-faceted. But one of the many steps in that path needs to be a wiser, less “progressive” economic policy. Economic policies more like what Alberta has.

Er, I mean, policies more like what Alberta used to have.