NS tax cut increases inequality between Halifax and rest of the province and between women and men

July 31, 2003

HALIFAX - According to a study released today by the Canadian Centre for Policy Alternatives the Hamm government's 10% income tax cut will increase the economic inequality between Halifax and the rest of the province, and between men and women. The study is the second part of the CCPA-NS series "Who really Benefits from Nova Scotia's Income Tax Cut." Using the most recent taxation data from Canada Customs and Revenue Agency, the study estimates the distribution of the income tax cut by counties and between women and men.

According to the study's author, CCPA-NS Director, John Jacobs, "the income tax cuts will not only increase inequality between upper and lower income households but also between the regions and between men and women." The study shows that women make up 43% of taxpayers but only receive 30% of the total tax cut. On average the tax cut for women who pay taxes in Nova Scotia translates to an annual savings of $241 whereas for men it is projected to be $412."

According to the study's author, "the provincial government is promoting the tax cuts as a policy that strengthens the Nova Scotia economy, but the tax cuts will provide little benefit to the regions of Nova Scotia most in need of strengthening. Halifax, already benefiting from strong economic growth, will disproportionately benefit from the tax cut."

The study finds that "taxpayers in Halifax county will on average receive a tax cut of $401, while taxpayers in Cape Breton will on average receive $259 and the rest of Nova Scotians will receive on average $287. Taxpayers in Guysborough County will receive the lowest average tax cut of $230 in contrast to their neighbouring county, Halifax, with the highest average tax cut."

According to the study, 42% of Nova Scotia taxpayers live in Halifax county but these taxpayers will receive 51% of the total tax cut. The 14.7% of taxpayers who live in Cape Breton will receive less than their proportionate share, 11.5%. The 42% of Nova Scotia taxpayers who live outside of these 2 counties will receive only 37%. "Overall," says Jacobs, "of the total tax cut of $147 million $75 million will go to Halifax county, $17 million will go to Cape Breton and $55 million will go to the rest of the province."

According to the study Nova Scotians will pay the price for the tax cuts through decreased services and increased user fees. "The Province already spends less on programs and services than other provinces and by decreasing tax revenue by $147 million, the tax cuts will further undermine the government's ability to make much needed investments in programs and infrastructure and to manage its finances. Given the precarious state of the North American economy and the Province's finances this is not the time for income tax cuts," concludes Jacobs.