Fraser Institute warns Atlantic Canada's high taxes, debt costs and ageing population strain fiscal outlook
The Fraser Institute, an independent, non-partisan Canadian public policy think tank, released a new report stating that public finances in all four Atlantic provinces are unsustainable and face risks that could worsen their fiscal outlook.
The 2025 update of Atlantic Canada’s Precarious Public Finances identifies rising debt-to-GDP ratios across Prince Edward Island, Nova Scotia, New Brunswick, and Newfoundland and Labrador as a sign of looming fiscal instability—absent any policy changes.
The report attributes this outlook to several region-specific challenges.
“Across Canada most provinces have fiscal challenges but there are several reasons to be particularly worried about the fiscal future in the Atlantic region,” said Ben Eisen, senior fellow at the Fraser Institute and co-author of the study.
One of the key risk factors is the region's reliance on fiscal transfers from the federal government.
Prince Edward Island (38.7 percent), New Brunswick (36.7 percent), and Nova Scotia (33.4 percent) receive the highest proportion of provincial revenue from Ottawa.
This heavy dependence leaves their finances vulnerable to any potential changes in federal transfers policy.
The report also highlights demographic pressures. All four Atlantic provinces have the highest proportions of residents aged 65 or older in the country.
With approximately one in five people in the region falling into this age group, the provinces face rising health-care costs and declining labour force participation.
In addition, the Atlantic provinces have relatively high tax rates across personal and corporate income taxes. With limited room to further increase tax rates, governments may struggle to cover immediate spending commitments.
Debt service costs further compound the problem. Nova Scotia, Newfoundland and Labrador, and Prince Edward Island are among the top five provinces with the highest debt charges relative to own-source revenue.
“Provincial governments across Canada are under fiscal pressure, but the financial situations of Atlantic provinces are particularly precarious,” Eisen said.
“Policymakers in the region should keep these risks front of mind when developing fiscal plans for each of the Atlantic provinces in the years to come.”
