Go after top income earners with a new tax bracket, Opposition urges P.E.I. government - Action News
Home WebMail Monday, November 11, 2024, 05:56 AM | Calgary | -1.6°C | Regions Advertise Login | Our platform is in maintenance mode. Some URLs may not be available. |
PEI

Go after top income earners with a new tax bracket, Opposition urges P.E.I. government

P.E.I.s Official Opposition says the provincial government is foregoing millions of dollars each year in tax revenues by not having a tax bracket aimed at the provinces highest income earners.

P.E.I. one of only two provinces with no tax bracket for those who earn $100,000+

P.E.I. is one of only two jurisdictions in Canada without an income tax bracket for those who earn at least $100,000 per year, something the Green Party is asking for. (CBC)

P.E.I.'s Official Opposition says the provincial government is forgoing millions of dollars each year in tax revenues by not having a tax bracket aimed at the province's highest income earners.

Without that, the province is "missing out on revenue from a group of earners who can afford it," said Opposition finance critic Hannah Bell.

"It's about making a more equitable share of revenues," Bell said. "So not only does it provide for a potential increase in revenue, but it spreads that tax burden more fairly among earners."

No bracket for six-figure earners

Across the country every province and territory has established brackets for collecting income tax, which dictate that as individuals earn more income, a larger proportion is collected by government.

P.E.I. has only three brackets for income tax tied with Manitoba and Saskatchewan for the lowest number in the country.

(Canada Revenue Agency)

And P.E.I.'s top tax bracket of 16.7 per cent kicks in at $63,970 the lowest level in the country, making P.E.I. and Manitoba the only two provinces with no specific tax bracket for people who earn more than $100,000 per year.

6,420 Islanders earned $100,000+

According to data from the Canada Revenue Agency, 6,420 income tax filers on P.E.I. in 2017 reported incomes above $100,000 including 590 who reported incomes of a quarter-million dollars or more.

With the P.E.I. government preparing to launch an online casino, expected to draw in an additional $1.2 million in annual provincial gambling revenues, the Greens say government would be far better off to forget the casino and instead go after those top earners with a new income tax bracket.

A new online casino the province is developing is expected to bring in $1.2 million in annual gambling revenues for the province. The Green Party says the province would be better off raising revenues by implementing two new tax brackets for high earners. (CBC)

"Online gaming targets and impacts most disproportionately those who can least afford it," said Bell.

Following the lead of other provinces with higher tax brackets "doesn't put any additional weight on Islanders who can't afford it," she said.

Using the most conservative estimates possible with that data, the Green Party says P.E.I. could raise at least an additional $3.7 million per year in income tax revenues if it bracketed its taxes the way Nova Scotia does.

Nova Scotia has a 17.5 per centtax bracket that applies to income over $93,000, and a 21 per centtax bracket for income over $150,000.

Given P.E.I.'s economic and population growth since 2017, the Greens suggest the actual revenues the province would gain from such a move could be much higher.

(Source: Canada Revenue Agency)


P.E.I.'s Department of Finance referred CBC to comments Minister Darlene Compton made when the issue was raised in the provincial legislature on April29.

"We continually are looking at ways to make sure that we are bringing in the revenues that we need for the province," Compton said after the issue was raised by the Green Party. "We'll continue to review all of the different ways that taxation could be administered throughout the province."

Compton mentioned that the King government has twice increased the basic personal exemption that's the portion of income that the province does not tax.

Bracket creepsince 2008

What no P.E.I. government has adjusted for a long time is the province's tax brackets.

P.E.I. is one of the few jurisdictions left in Canada that do not adjust income tax brackets automatically for inflation, leading to what's referred to as bracket creep.

Green Party finance critic Hannah Bell says P.E.I.'s current income tax structure places a disproportionate tax burden on low-income earners. (Al MacCormick/CBC)

That means inflation naturally pushes Islanders' incomes into higher tax brackets where a larger proportion of their income is taken in taxes.

The last time P.E.I.'s tax brackets were adjusted was in 2008, when the average personal income was $37,100.

By 2019, that average had risen to $42,500.

Over that time period an average income earner on P.E.I. would have seen their provincial income taxes rise by $745 per year.

According to CBC's calculations, that increase would only be $523 if P.E.I.'s income tax brackets were adjusted for inflation meaning bracket creep dating back to 2008 cost the average earner on P.E.I. an additional $222 on their 2019 income taxes.

"2008 was a long time ago, the last time that these were reviewed, and things have changed a lot," said Bell.

Without income brackets for top earners, Bell said more of the tax burden is shifted to low-income earners, a problem she said is only compounded by the province's static bracket levels.

"When you change the brackets, you're actually leaving more money in people's pockets at that lower end," she said.

More from CBC P.E.I.