N.B. premier faces pressure with throne speech

Premier David Alward is under growing pressure to break some election promises Tuesday in New Brunswick's first throne speech since the Progressive Conservatives were elected.

Alward, who defeated the ruling Liberals in September, promised not to raise taxes to rein in the deficit.

But he's faced with difficult choices as New Brunswick struggles with a dismal financial position.

The province's debt is projected to hit $9.5 billion next year. Last week, Finance Minister Blaine Higgs said the deficit is now more than $800 million — at least $50 million higher than the previous forecast.

Elizabeth Beale, president of the Atlantic Provinces Economic Council, said the government must consider raising taxes if it is to get control of provincial finances.

"What we have to do is look at the big areas such as the HST, which is a broad-based tax on consumption, and income taxes, which all of us have to pay at a certain level."

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Beale said tax cuts by the previous Liberal government have hindered New Brunswick's ability to expand revenues. She believes the new government needs to change course.

But Kevin Lacey, Atlantic director of the Canadian Taxpayers Federation, said Alward should resist pressure to raise HST, which is 13 per cent in New Brunswick.

"In Nova Scotia, when they raised the HST, the revenue actually fell because the economy was hurt as a result from it," Lacey said. "Raising taxes is not the answer that a lot of these experts think it is."

Lacey said the government should look to privatize some assets such as NB Liquor.

During the election campaign, Alward said he would cancel planned tax reductions for New Brunswick's 1,300 richest residents, who have an average annual income of $450,000. He also promised to cancel a cut in the corporate tax rate.

Every government department has been ordered to cut spending by one per cent this year and two per cent annually for the next three years.

Liberal Opposition Leader Victor Boudreau said if Alward is serious about reducing the deficit, a two per cent cut in spending won't be enough.

"They have approximately $150 million in new spending commitments that they made during the campaign, over and above any cost-cutting measures," Boudreau said.

"You can either cut services or raise taxes," Boudreau said. "Or we had taken the approach of growing the economy, but obviously they didn't think that was possible. They didn't set any targets whatsoever as we did on growing the economy."

Alward has vowed repeatedly that he would not raise the harmonized sales tax.