Op­ti­mistic out­look

Op­po­si­tion MLA says gov­ern­ment is over­pro­ject­ing rev­enue in its bud­get

The Guardian (Charlottetown) - - PROVINCE - BY DAVE STEWART THE GUARDIAN

The pro­vin­cial gov­ern­ment is look­ing through rose-coloured glass when it comes to fi­nances, says Belfast-Mur­ray River MLA Dar­lene Comp­ton.

The Op­po­si­tion MLA says the province has bud­geted an ex­tra $35 mil­lion in tax rev­enue this fis­cal year but she wants to know where Fi­nance Min­is­ter Allen Roach is go­ing to find the money.

Comp­ton said gov­ern­ment, for the last eight years, has taxed Is­lan­ders to a record ex­tent, and this year alone gov­ern­ment will take in $875 mil­lion in pro­vin­cial taxes and more than $950 mil­lion with li­censes, fees and other sources.

Comp­ton said the ex­tra $35 mil­lion equates to an ex­tra $520 for ev­ery house­hold in the province.

Roach said dur­ing the last num­ber of years, tax­a­tion in P.E.I. has been brought in line with a num­ber of other prov­inces. He added once gov­ern­ment turns a sur­plus it will “take a very close look’’ at tax­a­tion lev­els again.

“It comes back to overex­ag­ger­ated es­ti­mates for rev­enue,’’ Comp­ton later told The Guardian. “How do we jus­tify $35 mil­lion in in­creased tax rev­enue?’’

Comp­ton said the province is pre­sent­ing a best-case sce­nario when it comes to the books.

“There are no hikes to in­come tax so we take from that that we’re go­ing to grow the econ­omy by that much this year which, for all in­tents and pur­poses, sounds won­der­ful, but how is that go­ing to hap­pen?’’

The Op­po­si­tion pre­sented a re­port from Toronto’s Moody’s In­vestors Ser­vice on June 22 that in­di­cated the P.E.I. gov­ern­ment in the past has based num­bers on sec­tors such as agri­cul­ture, tourism and food pro­cess­ing. The in­vestors ser­vice notes the prob­lem with that is it’s dif­fi­cult to truly gauge eco­nomic ac­tiv­ity un­til late in the year, when there is lit­tle time to ad­just to un­fore­seen down­ward pres­sures.

“Although the province has pre­sented a plan of a small deficit fol­lowed by a re­turn to bal­ance, we ap­proach some of the as­sump­tions with cau­tion as they seem to be tilted to pos­i­tive,’’ Michael Yake, vice-pres­i­dent of Moody’s, said in a news re­lease.

Roach says the es­ti­mates are made from trends dur­ing the past six to seven years that are tak­ing place in the Is­land econ­omy where GDP and rev­enue con­tin­ues to grow.

“Our ex­ports, in­ter­na­tion­ally and na­tion­ally, have grown con­sid­er­able, in fact, to the high­est we’ve ever seen in the history of the province. I wouldn’t call that a guess. I would call that watch­ing what’s tak­ing place (with the P.E.I.) econ­omy,’’ Roach said, adding there are other bond raters which wouldn’t agree with Moody’s.

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