Taxes too high, but debt levels, demographics a plus for P.E.I.: APEC

The Atlantic provinces have little room to manoeuvre as they try to reduce their debt level, according to a new report from the Atlantic Provinces Economic Council (APEC).

Debt levels in the region have been growing since the 1990s, and the situation in Atlantic Canada could soon get worse with an aging population, according to the report.

In a news release, APEC CEO Finn Poschmann said there is little room to increase taxes or broaden the tax base to reduce debt.

"As to corporate income taxes and consumption taxes, the Atlantic provinces possess all of the highest rates among all of the provinces," Poschmann said.

"Raising corporate tax rates would depress business investment, and might as likely reduce provincial revenue as to increase it, and further raising consumption tax rates seems politically implausible."

Some pluses for P.E.I.

The tax issue is particularly problematic on P.E.I., according to the report. Corporate income tax rates are relatively high, and personal income tax rates have been increasing due to a lack of indexing on personal exemptions.

But it is not all gloom for P.E.I. in the report. APEC said the province is doing well, even in comparison with all Canadian provinces, in its efforts to balance the budget.

P.E.I. also has the youngest population in Atlantic Canada, and that will put less pressure on social systems in the coming years.

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