A new report is calling on Atlantic Canada's provincial governments to adopt the taxation policies of neighbouring New England states.
"Atlantic Canada has struggled for decades with low investment, which leads to high unemployment and net outflows of people," said Mark Milke, author of Tax Competitiveness: New England and Atlantic Canada Compared. "High tax rates don't help reverse that."
Released by the Halifax-based Atlantic Institute for Market Studies (AIMS), the report recommends Atlantic Canadian provincial governments allow for further resource exploration and development, move to a simpler income tax code with emphasis on lowering business taxes and spending restraint.
"There is a practical reason to allow natural gas development -- extra royalties and extra business taxes that then can be used to reduce overall high business and personal tax rates in the region," said Milke. "It's hard to lower Atlantic Canada's taxes without a new revenue stream, unless one wants deep cuts to program spending."
Lower taxes and natural resource development will create a much better economic environment, he added.
"Atlantic Canada has been a high tax jurisdiction since at least the 1970s," said Milke. "Lower taxes and smart investment policy is why Alberta has thrived for decades despite occasional bumps like now."
According to the study, the lowest top marginal personal income tax rate in New England in 2016 is New Hampshire's, at 39.6 per cent, compared with a top marginal rate of 54 per cent in Nova Scotia.
"Entrepreneurs will not touch Atlantic Canada with top marginal rates in the high 40s and low 50s," said Milke.
The general corporate income tax rate in New England ranges from seven per cent to 8.93 per cent, almost half the standard corporate rate in Nova Scotia and Prince Edward Island.
"It is important to note that when comparing Atlantic Canada with New England that taxing powers between the federal governments and provincial, state and municipal governments in the two countries are vastly different and all tax bases should be considered," said Marla MacInnis, spokeswoman for the Department of Finance.
"The responsibilities for delivery of services are also very different, for example, universal health care."
MacInnis said it's within the mandate of Finance and Treasury Board Minister Randy Delorey to review options to implement changes to the province's tax structure to support economic growth.