Alward urged to raise N.B.'s HST

David Ganong is calling on the Progressive Conservative government to raise the harmonized sales tax in an attempt to pull New Brunswick out of its deepening fiscal crisis.

The chairman of St. Stephen-based Ganong Bros. Ltd., who helped organize the Future N.B. conference this week, joined a high-profile group of New Brunswickers who are trying to convince Premier David Alward to raise the HST.

Ganong said he believes the HST should be raised, even if that makes it harder for his well-known company to sell chocolates.

"It may make it moderately harder but if we believe there has to be tax increases — and I do — then your options are rather limited," Ganong said.

The Progressive Conservative government opened the legislative assembly last week with a throne speech that starkly claimed that New Brunswick was mired in a "fiscal crisis."

Finance Minister Blaine Higgs then indicated the province was facing an $820-milion deficit, up from the $747-million deficit that had been originally projected by the former Liberal government.

Higgs also said the provincial government could be hit with a $1-billion deficit in 2011-12 unless serious changes were made.

'What he has to do on that front is pick the best of a bad bunch of options.' — David Ganong

The Tories have asked government departments to trim their budgets by one per cent this year and to prepare for a two-per-cent budget cut next year.

Don Drummond, a well-known economist at Queen's University, told the Future N.B. summit earlier this week that either the provincial government had to increase the HST or freeze government spending.

The failure to adopt either of these measures could lead to a $2-billion deficit within the next five years, according to Drummond.

A one percentage point increase to the HST raises $125 million in revenue for the provincial government.

The provincial government could raise $250 million by returning to the HST to the same level as it stood before Prime Minister Stephen Harper reduced the federal share of the sales tax.

'Difficult medicine'

However, Alward said in the provincial election campaign he would not raise the HST. He has often said his campaign promises are his "contract" with New Brunswick citizens.

Alward said on Wednesday he was surprised at what he heard from the conference participants, especially that many felt he should break his election promise not to raise the HST.

The premier did not say exactly what steps his government would take to escape from the growing budget deficits.

"We are going to need to face the challenges and move forward together and with that will be some difficult medicine," Alward said.

Ganong said he understands Alward is in a tough position.

However, the business leader said Alward should focus on the HST because hiking other taxes would be tougher on business and the economy.

"What he has to do on that front is pick the best of a bad bunch of options," Ganong said.

The Tory premier did not rule out a possible increase to the gasoline tax when pressed by reporters on Nov. 25.