The untold story of inequality in Atlantic Canada

Statistics Canada released new data this week on high income trends in Canada with nary a mention of the Atlantic provinces. From a Canadian comparative perspective, the data told a story that was more striking for most of the rest of the country and in particular, Alberta, Ontario, BC and Quebec where 92% of the top 1% of tax filers are found, with only 3.4% in Atlantic Canada.

The inequality that exists in Atlantic Canada also tells a story that should be told.

These data reveal that the Atlantic provinces are all significantly less equal today than they were in 1982.  The trends are troubling, but not surprising.

Are there things that we can be proud of in Atlantic Canada?  Sort of. It is true that Atlantic Canada is less unequal than the rest of Canada. The gap between the top 1% and the bottom 90% is smallest. PEI has seen the smallest increase of any other province in the country of the ratio of the top 1% to the bottom 90% of Islanders.  It is also true that the bottom 90% in two Atlantic provinces had the greatest gains in the federation; in both Newfoundland and PEI, the bottom 90% saw an increase in income of 29% between 1982 and 2010.

But, let’s not be too complacent. PEI might have the smallest gap increase, but the average income of the top 1% is still eight times that of the bottom 90% of Islanders –the ratio was 7.6 times in 1982. Moreover, the average income of the top 1% in Atlantic Canada is still 10 times that of the bottom 90% (versus 15 times on average in the rest of Canada). Nova Scotia and New Brunswick saw modest income gains of 16% and 19% respectively for the bottom 90% of tax filers, while the top 1% in each province enjoyed an increase about twice as much.  We are not without extreme inequality either.

Saint John, New Brunswick has the highest ratio in Atlantic Canada where the average income of the top 1% is 12 times the average income of the 90%. Since 1982, the bottom 90% in Saint John saw their real average income increase by 15% while the average income of the top 1% increased by 72%; that’s five times greater!

Part of the story emphasized by Statistics Canada was that women made significant gains across the country. In Atlantic Canada, women now make up 20% of the top 1% of tax filers versus 9% in 1982. Concentrating power in the hands of a few, whether those hands belong to men or women, has a negative impact on our democracy and our society as a whole.

To be in the 1% in Atlantic Canada you need to have an income of at least $151,900 with an average income of $259,300. The average income of the bottom 90% of tax filers in contrast is $26,700. The average income of the bottom 50% is $13,600 and accounted for 19% of region’s total income. The 1% accounts for 7% of the region’s total income.

Such egregious income inequality is bad for all Atlantic Canadians and has been recognized as an economic, political and social problem the world over.

The story told by StatsCan’s recent inequality data is not a good one.  The upshot is we have the capacity to change where this story will go next.

Instead of trying to grow our way to prosperity by incubating the 1%, governments need to make smart decisions that benefit the bottom 90%.  Austerity economics only exacerbates inequality. Those societies that are more equal have been found to have some things in common including strong unionization rates. We can learn from them, redress the imbalances, curb inequality and change the story of Atlantic Canada to one about mutual prosperity.

The New Brunswick government should provide its citizens with full information about what a fair tax system would like and exactly who pays for tax increases. Any tax increase must be progressive, meaning that they are based on the principle of ability to pay — the more you make, the more you pay as a share of income.  However, increases in income tax for high income earners should be combined with some reversal of corporate tax cuts. Consumption taxes and user fees (such as a medicare premium) are regressive. Regressive taxes charge everyone the same dollar amount or same percentage and thus take up a bigger share of income for lower-income people than higher-income people. Fixing the tax system must be about ensuring that the government can provide strong social programs, so everyone is afforded a good quality of life and the opportunity to thrive.

Jason Edwards, Research Associate, CCPA-NS and Christine Saulnier, Nova Scotia Director, CCPA, an independent, nonpartisan, research institute focused on social and economic justice.