Canada

$15 Minimum Wage Would Lift All Nova Scotians Out of Low Tax Bracket

Similar to the recent NCP campaign in Alberta that rose the minimum wage to $15, Nova Scotia NDP leader Gary Burrill has launched a “Fight for 15” campaign, but, critics have pointed out, while the bigger number has proved popular with minimum wage workers, it would mean important tax increases for those same workers while making it more difficult for small businesses and students.

Jordi Morgan, vice-president for Atlantic Canada at the Canadian Federation of Independent Business (CFIB), has pointed out that the increase from Nova Scotia’s $10.70 minimum wage to $15.00 would be enough to push many part-time workers, who are below the province’s basic personal exemption level (BPE), to a level where they would be taxed on income. A $15 minimum wage would also push all full time workers out of the lowest tax bracket.

At $8,481, Nova Scotia’s BPE is the second-lowest in Canada. The alternative to a wage increase, according to Morgan, is raising the BPE.

“Our premise to this point is an increase to the BPE is a better policy lever because it would have a desirable impact by reducing the tax burden for all citizens, not create downward pressure on employment for youth, and it would not have a negative impact on the growth of small- and medium-sized business,” Morgan told The Speaker.

Morgan also noted that a wage increase to $15 in Nova Scotia would not be the same as the one that happened in Alberta. “[I]t would stand to reason that the tax payable would be much higher here than Alberta because our BPE is nearly $10,000 lower and at 15.00/hr, it would push the provincial personal marginal tax rate from just under 8.79% to almost 14.95%. Alberta has a 10% tax rate up to $125,000.”

Jordi Morgan, Vice-President, Atlantic Canada
Jordi Morgan, Vice-President, Atlantic Canada

Currently, the just over $22,000 earned by minimum wage workers in Nova Scotia puts them in the lowest tax bracket, which means they are taxed under 9% provincially, and are taxed 11.43% total. Even if these workers get a raise, there is still room to remain in this low tax bracket.

The limit of this tax bracket is $29,590, so even at $14.00 workers still pay the lowest amount of taxes, grossing $29,120.

At $15.00, workers earn $31,200. They are in the next tax bracket, and are taxed just under 15% provincially, and are taxed 18.84% total.

By Justin Munce

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