Spot the Mistakes

A fun game for kids are those "Spot the mistakes" pictures where you can find places where the artist has drawn people doing things incorrectly and kids get to pick up on others' mistakes.

A less fun pastime for adults is the "Spot the mistakes" game that comes with every Liberal press release.

Recently the acting Liberal Finance Minister decided to write a six paragraph letter to the editor in defense of the Grit tax plan. Unfortunately he left out about 10 more paragraphs (if he really wanted people to have the whole story).

Some of the gems in his letter include:

"It is true that we modestly increased taxes in our first budget" - well modesty is in the eye of the beholder I guess.

"When we took office, independent auditors showed us ... we were facing a potential deficit of $400 million". Yes, the Grits did hire the accounting firm of Grant Thornton to tell them, based on a worst case scenario, how bad could the province's books get? And they did say, if the Liberals were to completely fail as a government the deficit could reach $400 million.

But what actually happened is that because of the good financial management New Brunswick had over 7 years with Bernard Lord the year end budget was more than balanced. In fact when the Liberals announced their first budget (the one with all the tax hikes) they said there would be about a $35 million surplus for the year before instead of a $400 deficit. But as if their credibility wasn't already in doubt, when the actual Auditor General got finished with the books, it turned out that the last Bernard Lord budget resulted in a $237 million surplus. Whoops. Better not talk about reality when we have a report we paid $400,000 for that talks about fantasy numbers instead.

(Interestingly, the Liberals have never released the full Grant Thornton Report to the public, only the Executive Summary)

Acting Minister Keir's tall tale in the TJ keeps on delivering however, when he writes "In 2007 we increased personal income taxes by approximately $50 million. This year we have lowered them by $118 million...". Did you miss it? That's right - there was a whole year that took place between 2007 and this year which is 2009. How much was collected by the government in personal income taxes in 2008? We don't know because Mr. Keir conveniently leaves that page off his calendar.

But not to be a total Scrooge, Minister Keir does give some credit to the PC Opposition for being right about the highest earning 1,300 New Brunswickers getting the most tax cuts. But in an effort to downplay the amounts he says those 1,300 richest New Brunswickers "will still pay 5.2% of total all income tax in the province" down from paying 6%.

Gee, only a 0.8% reduction makes it sound like a pretty small tax cut, eh? Well consider that this year NB will collect more than $1.2 Billion in personal taxes. If the richest 1,300 contribute 6% of that that means they pay $72 million of the total. Thanks to the Liberal tax plan those same wealthy few will get $8 million in Liberal tax reductions to split between them, or about $6,000 per individual.

I wonder why Keir did not compare that to Premier Graham's recent visit to Dieppe where he was bragging about his great tax plan that is going to save a family there about $10 a week...

Graham Tax Increases - The Never Ending Story

The Graham government has raised taxes again, this one with a special twist.

The executive dream team at NB Liquor, led by Dana Clendenning (currently under a cloud of a conflict-of-interest allegations), requested that the companies that sell wine to NB Liquor increase their prices.

That is correct, as loony as that sounds, NB Liquor asked to pay more. Well not really asked, they told them to pay more. We here at NB Conservative cannot understand this fact alone, but it gets worse. Much worse.

The reason they did what can only be described as an idiotic move, is that Team Graham is now selling tax-cut-mode, as opposed to the tax-increase-mode he was selling two years ago.

As Mr. Clendenning wanted to avoid being seen to increase taxes on New Brunswick consumers, to keep his rain-maker happy, the Team felt the best way to increase taxes on New Brunswickers was to share the loot with large, mainly foreign, wine companies.

This may take a pencil and some loose leaf paper (with lines), but keep with us. If you have a calculator on your phone, now is the time to get it out.


The Scenario:

You are the patronage appointment of a crown corporation in New Brunswick. You need to generate some cash to make your patron look better. And you want to travel to really, really nice wineries in beautiful countries, at no cost to yourself. Countries like Italy, where you can rent apartments to share with friends, who did not win the patronage lottery. Or France. Probably not Sweden, they do not produce much wine, and it is cold anyway.

If you just raise the mark-up like you have the past couple of years, it looks like you raised taxes, since the serfs cannot shop elsewhere for their goods. And remember, we are now in tax-cutting-mode, so increasing 'mark-up' looks quite a bit like 'taxes'.

You realize the markup on wine is 145% (really). A $10 increase in the case price NB Liquor pays turns into a $24.50 increase in the shelf price ($10 + $14.50).

Voila! an extra $24.50 per case!

But what you needed to do to accomplish this tax increase is give $10 per case to the wineries. Or 40.8% if you have the fancy calculator phone.

What is the difference you ask than just putting up the price, since people who drink wine are rich, snobby, Volvo-driving yuppies that can pay more? The difference is that if you think the Graham government can spend your money better than you (or anyone else's money for that matter) than why let them give 40.8% of the money to large wine companies in California, France, Australia, Chile and everywhere else NB Liquor buys wine.If you are a believer in higher taxes, we would guess you are not a believer in giving a large percentage to foreign multi-national corporations.

That is correct, in order to avoid looking like they raised taxes, the government of New Brunswick will give wine companies over $475,000 (based on projected annual wine revenue of $60,000,000)

So, our dream team at NB Liquor just gave almost half a million dollars to wine companies to avoid looking like they increased taxes.

Why Should I Care About the Deficit?

It's a simple formula: Today's deficit = tomorrow's tax increase.

You may think the money you borrow doesn't have to be repaid. Businessmen know better. In the world they inhabit, businesses with cash flow problems are businesses in trouble.

1. Tomorrow's tax increase = today's bad investment climate.

2. Today's bad investment climate = less investment today.

3. Less investment today = fewer jobs today, and tomorrow.

DEFICITS KILL JOBS, BECAUSE THEY KILL THE INVESTMENT THAT CREATES JOBS.

Oh, but you say, if tax rates are lowering, doesn't that encourage investment? Only stupid investment.

Let me give you a practical example. Suppose I offer you a stove that uses a special kind of fuel. Right now the fuel is cheaper than the alternative, but three years from now it will probably cost much more than the alternative. Would you pay money for a new furnace which burns my temporarily cheaper fuel? No you wouldn't. Would you invest in a province which temporarily has a lower tax rate, but which has deficits leading to a higher tax rate in the future? Answer: you would ONLY if you plan to get out before the tax rate goes back up.

In other words, you'll create some short term jobs, but if you're planning to create long term wealth from an ongoing investment, you'll seek a financially stable (low debt/low tax rate) jurisdiction.

Can you see now how the Liberal approach encourages short-term, handout-dependent industries?

Oh but you say, if there's growth, we won't need to raise tax rates, the growth will take care of that. That's true, and also unlikely to happen. The more investment you attract, the further you can spread the tax burden, and the lighter it is on everyone. Deficits push away investment, and the remaining industries know that. What do you think works harder, a horse in a team of 8 or a horse in a team of 4? Who do you think is more likely to be taxed higher in the future, a business starting in a low-debt jurisdiction or one starting in a high-debt jurisdiction.

Psychologically, we tend to heavily discount future events. We'll pay those bills later (or our grandchildren will), so why worry now? This ignores the reality of investment, which is: TODAY'S HIGH DEFICIT IS KILLING JOBS TODAY. Not when the debt comes due, not 10 years from now, but RIGHT NOW.