Reality Check: Minding the revenue gap

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Lost in the media glare around Don Drummond’s message of expenditure restraint delivered by was the other side of the equation – government revenues. Drummond’s mandate excluded consideration of tax policy, which is highly problematic by itself. But his revenue forecast left some commentators downright perplexed.
 
USW economist Erin Weir recently drew attention to the Drummond Commission’s problematic assumptions about the prospects for revenue growth. If government revenues actually keep pace with economic growth, Drummond underestimates the province’s 2017-18 income by approximately $10 billion.
 
To bridge the revenue gap further, Weir also proposes tax increases along lines similar to those outlined by CUPE’s Toby Sanger. Tax measures such as restoring the corporate income tax rate to 14 per cent, restoring the corporate capital tax, increasing the tax on personal incomes over half a million dollars, and eliminating certain business tax credits and exemptions can raise between $0.5 and $2.5 billion. With these figures in mind, Drummond’s harsh medicine of public service austerity seems harder to swallow.

This article originally appeared in the OCUFA Report. To receive stories like this every week in your inbox, please subscribe.

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