An equation for attracting and retaining talent
A lot of people who move to Atlantic Canada are surprised by the taxes they face here. The sales tax is higher here. Income taxes are higher here and, many, are quite surprised at the high property taxes. On that last one, most people are not really paying more they just face higher tax rates. They can’t wrap their heads around how they pay almost the same property taxes in New Brunswick and Ontario even though their house was valued 2.5 times higher before they moved here. The simple answer is that while your house might have been valued 2.5 times more, the salaries for firefighters, police and other municipal workers are only slightly lower here and, in some cases, higher here. Therefore, higher rates are needed here to raise similar levels of taxation to pay for public services. Phew.
Why would anyone move to a high tax jurisdiction? Why would a person earning $150,000 want to move from BC to Nova Scotia only to face a potential income tax bill nearly $10,000 higher?
A few years ago I came up with this little equation to explain it but to also highlight that while there is more to life than taxes, other things matter.
Here is the equation:
Tax bill + cost of living + quality of public services + living environment = capacity to attract and retain talent.
Of course there are both quantitative and qualitative aspects to the equation but it can be boiled down to a rating. In the example below, Community Y has high taxes (say, $10,000 more per year than Community X) but is better on other cost of living aspects (lower housing costs, lower child care, insurance rates and other costs such as entertainment). Community X and Y are perceived to have similar public services - health care, education, etc. However, Community Y is considered to have a much better living environment including commute times, crime rates, access to green spaces, etc.
In the end, Community Y is perceived to be a better place to live (attraction and retention) than Community X even with a much higher tax bill.
Now, this raises a lot of questions for the high tax jurisdiction:
Salaries tend to be lower in the higher tax locations (not always but mostly in Canada).
The ‘other’ cost of living advantages in Atlantic Canada are starting to erode (housing, insurance, etc.).
The quality of public services matters - many people moving here are grumbling about both health care and education in much of the region.
Commute times are rising, crime rates are up, etc.
So, the simple point is this. People will pay more in taxes if they perceive the scale is balanced with other benefits. If they don’t see those other benefits, taxes become more of a barrier to migration.
For me, the quality of life here is worth more than everything else on the list, and the extra tax is not something I bother to factor into the equation. But an extra hour commute every day is a deal-breaker... two hundred hours in a car every year for the rest of my life? That's definitely a deal-breaker! People who say "hello" with a smile to a stranger, drivers who let the old lady in the lane, and not having to hear an angry horn blow for months are all more important to me than the meagre difference in taxes... Living in a noisy, dog-eat-dog city... Forget it!
I'm one of those Ontarians who had been to the east coast for work many times and loved it. NB is my home now and my only regret is that I wish I had made the move sooner.
Yes, taxes are higher here. The property taxes for "in-city" living is just plain ridiculous. I could live outside of Fredericton and pay less property tax on an acre lot. I can't comprehend that. I almost thought is was a matter of New Brunswickers liking simple math. Yes, 1% of your property value makes for simple math, but it's unsustainable. As the cost of housing goes up, so does your property taxes. I've tried to explain to people that it's not a sustainable practice. Sooner or later no one will afford a house simply because of the property taxes.
My biggest cost increases came from the cost of electricity. No other viable power options. NB Power has got us all by the short and curlies. Most of the west heats their homes with natural gas. With electricity and natural gas I paid less than I do here. And, the winters are NO colder, so please don't even think of making that arguement. I've had 6 NB Power increases in the last 3 years. If that happened in Ontario the whole C suite would have been fired! And, dairy. What is with the cost of dairy here? Why is every dairy product more expensive here?
Having said all that, I would not go back to the shit show that Ontario has become. Ontario is more of an American state. Everything in Ontario is a competition. Even winning a parking spot is a big deal, not to mention the price tag. A parking spot for your 600 square foot condo costs about $20,000. I can drive to Fredericton from Moncton in an hour and a half or I can sit on the QEW for the same amount of time.
Can New Brunswick make improvements? Yes, it can and it should. Now, if we can only get more trades people here. Like plumbers, anyone know a good licenced plumber in the Freddy area?