Promises, tax cuts and difficult choices

December 1, 2003

According to a report the Canadian Centre for Policy Alternatives released last week Nova Scotia is performing very poorly on the issue of reducing child poverty. The most recent Statistics Canada numbers confirm we are behind many provinces whether we look at before or after tax family incomes. By chance, the release of the report coincided with announcements by the Hamm government of cuts to government services. Nova Scotians have also been told to expect another round of cuts in next Spring's budget.

The premier is forecasting "several years" with "stormy seas" and "very difficult choices." This was the same refrain heard from the Hamm government during its previous term in office. What is different this time is that the cuts to programs and services are being implemented along side income tax cuts. These cuts are undermining the government's ability to maintain the services Nova Scotians need and tying its hands when it comes to addressing pressing needs.

Imagine what could be done if, instead of its focus on providing income tax cuts of $147 million, this government began to pay attention to reducing poverty? The government could help low income households and the children that live in them through a number of options that have proven effective in other jurisdictions. For these households the provision of regulated, affordable child care spaces for each child that needs it would play a crucial role in increasing the employment opportunities for parents. Another measure needed to decrease our child poverty rate is increases to government transfers, such as income assistance rates. These measures along with substantial increases in the minimum wage rate would provide immediate tangible benefits and decrease the rate of poverty.

Instead of investing in services that would benefit low-income households the provincial government recently cut $5.8 million from the budget of the Department of Community Services, the department that provides funding for child care and income assistance. This is a further cut for a department whose funding in last Spring's budget failed to keep pace with inflation. Last week the premier appeared to serve notice that this will not be the last of the cuts.

Dr. Hamm's government seems to have other priorities than providing support for those most in need. The cornerstone to the government's new term is income tax cuts that disproportionately benefit the wealthy. More than half of the tax cut will go to the 19% of Nova Scotians with annual incomes over $50,000. The cuts also disproportionately benefit men over women, and Halifax over the rest of the province.

Last week in the wake of our child poverty report, these tax cuts were promoted, by the government, as a solution to child poverty in Nova Scotia. With one hand the government was cutting the Community Services budget, while with the other it was pushing the concept that their tax cut strategy will stimulate the economy and provide increased revenue for greater investments in programs and services.

Nova Scotian would be well advised to resist this leap of faith that the provincial government seems intent on taking While the income tax cuts provide a substantial benefit for some, the price for these cuts is already being borne by those most vulnerable in our society -- children, youth and low income households will suffer because of cuts to the programs and services they rely upon.

Income tax cuts mean decreased revenue capacity and there is simply no conclusive evidence that tax cuts lead to increased revenue. The recent experience of the Ontario government should provide caution for any government contemplating a strategy based on a belief that tax cuts will lead to increased government revenue. After years of the Harris government cutting taxes and programs, the new government in Ontario is facing a massive deficit.

Even if for a moment we accept the belief that tax cuts will increase revenue, there is no guarantee that the government will invest a future surplus in programs and services. If the recent behaviour of the Nova Scotia government, along with the records of other governments, is any indication, any surpluses generated will disproportionately go to more tax cuts and debt reduction.

John Hamm is indeed correct in stating that Nova Scotians have some choices to make.

The level of child poverty in Nova Scotia shows us how households are faring in the context of a widening gap between the rich and poor. Do we want to live in a province that allows so many households to fall below those levels needed to provide the essentials, while our economy provides ever increasing wealth for the top-earners. Or, do we want a society that allocates some of that wealth to providing support the most disadvantaged in our society?

Rather then dealing with these fundamental choices, the provincial government is focusing public attention on the "difficult choices" relating to which programs to cut to pay for the tax cuts. The Premier needs to be forthright about a more fundamental choice the government has made - providing a tax cut to benefit the wealthy over providing essential services to Nova Scotians most in need.