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Moncton Times & Transcript ~ Tax Help Plus ~ Stay East Young Man ~ November 28, 2006 - 29 Nov 2006 by TaxHelp
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We all know people who have made the trip out west to seek work. Probably the most interesting example I saw this year was when one of our white-collar clients packed in his long-time sales job and traded in his briefcase for a hard hat. But at the end of the day is it worth it? Certainly wages are legendary but one could argue that there is more to meet the eye than just money. Since most people consider Alberta to be the cat’s meow, is there anyway to view it other than the land of opportunity?
While Alberta seems to have everything and some could make us believe that New Brunswick is the poor cousin, things are not always as they appear. Without a doubt, resource wealth particularly in the oil and gas sector is tremendous out west. However, the Fraser Institute does a lot of work in the area of analyzing income and taxes. In their preliminary numbers for 2006, they estimate that a family of four with two children under the age of 18 has a combined income of $100,679. They also indicate that a comparable family unit here in the province earns $82,435.
While relative income is significantly higher out west, at the end of the day does it translate? Perhaps a better measure is the theoretical tax freedom day. That is the threshold date when all the various taxes have been paid and the individual begins to work for himself. In 2006, the tax freedom day for Alberta was June 6. In New Brunswick it was just six days later and a full week earlier than the national average. In fact, if one reviews 2005, New Brunswick was three days sooner than Alberta.
These calculations factor in all taxes - municipal, fuel, property, sin, medical and the like. It’s not surprising to see that auto related taxes like license fees and gasoline levies are only $844 in Alberta compared to $1,222 here. However, you may be surprised to see that hospital and other social welfare type taxes are $5,615 in our province and $7,644 out there. In fact, when one looks at the total tax rate as a percentage – both Alberta and New Brunswick pay about 42.5 per cent.
You might wonder about the cost-of-living issues. While it appears one can earn tens of thousands more out west, the cost-of-living ends up being a huge issue. A three bedroom, two bath bungalow runs hundreds of thousands more in price than a comparable local property. Then one has to address the lifestyle costs. A large coffee from the local drive thru is 20 per cent higher, while season tickets to an event like major junior hockey runs almost 50 per cent more.
Many people make much of the lower provincial taxing regime that Alberta enjoys. People often think that the tax system is much lower in Alberta. But as the Fraser Institute demonstrates, the difference is less than one would suspect. And for transplanted New Brunswickers leaving families here, they must file as New Brunswick residents at the end of the year, thereby paying New Brunswick rates. Furthermore, the second home cannot be deducted as an employment expense, so it almost makes the argument moot.
So can anyone win by moving out west? Certainly, there are many people that it’s attractive to. For those with a sense of adventure there is an opportunity to earn a significant income. Young people in particular with no real roots to the province, can end up establishing residence and paying taxes at the Alberta rate. They can gain valuable job experience and advance their trade. For those with limited skills, it’s my understanding that base labourers earn thousands of dollars each week. And as the opportunity expands here in the province over the next several years, they can return home with new skills to earn competitive wages right here.
I can hardly wait to see my friend for a full report on his experience with living in the camps.
Roger Haineault is with Help 4 Taxes. His column "Tax Help Plus ..." appears each Tuesday. For questions, comments or column suggestions he can be reached by calling 855-HELP (4357) or by emailing roger@help4taxes.ca
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