Weakening commodity prices and soft economic conditions are making it increasingly likely federal and Atlantic governments will postpone their target dates to return to balanced budgets.
With relatively high tax rates in the Atlantic provinces limiting the possibility of further increases, a report released by the Atlantic Provinces Economic Council (APEC) suggests governments should be tightening expenditures and considering tax reform.
"This past year was a grueling one for Atlantic Canada's economy. Falling commodity prices, static populations and about 5,000 net lost jobs contributed to generally weakening provincial fiscal situations," says APEC President and CEO Finn Poschmann.
"Sustainable spending management and growth-orientated tax changes are key for long-term prosperity. The changes we recommend are going to be difficult in the short term, but they are necessary given the subdued economic outlook."
APEC's Atlantic Report offers recommendations for tax reform in a number of areas, including corporate, personal taxes and sales taxes.