A review of Nova Scotia's tax system, ordered by the governing Liberals, is recommending major changes to the way the province collects taxes.

The most significant change is a shift away from personal tax revenue in favour of sales taxes.

Laurel Broten, a former Ontario cabinet minister, was appointed in February to lead the review. She said the proposed tax increases should be offset by lower income and corporate tax rates and a government spending freeze that could amount to $1 billion in savings by 2020.

Her report makes 22 recommendations related to taxes and 20 recommendations related to provincial fees, including:

Eliminating point-of-sale rebates on books, children's clothing, shoes, diapers, feminine hygiene products, residential energy and first-time home purchases.

Increasing the basic personal exemption to $11,000 from the current $8,481 when it comes to personal income taxes.

Freeze all department and program spending.

Get rid of the top income tax bracket for people earning more than $150,000 per year.

Eliminate the volunteer and healthy living tax credits.

Gradually lower the general corporate tax rate from 16 per cent to 13.5 per cent.

Impose a carbon tax on environmental pollutants and the goods that produce pollutants.

"All of these measures in those first years are revenue neutral and in fact are beneficial to the population in terms of tax cuts in the later years of the five-year plan which I map out," Broten said.

She is also recommending the province's top earners no longer be taxed at the top rate, which she said sends the wrong message to those who make more than $150,000 a year..

'We need to be bold'

The study said that at virtually every income level, Nova Scotians pay either the highest or second-highest personal income taxes in Canada. Its corporate tax rates are also among the highest in the country.

Broten said it sends the impression that, "We don't want entrepreneurs here. That we don't want people who will take risks, who will build businesses."

The report said it's unacceptable to think that as the baby boomer generation retires and ages that a significantly smaller, younger population will support bigger budgets for things like health care.

"The review confirms that the trajectory Nova Scotia is on is unsustainable," Broten told a new conference.

"Either Nova Scotians can decide to make changes to turn around or we will tumble, without sufficient revenue to pay for the public services we all want to support our quality of life."

Finance Minister Diana Whalen, who ordered the review, isn't saying what she's ready to accept out of Broten's report.

"We really need to be open minded. We need to be bold," she said.

Progressive Conservative Leader Jamie Baillie said taxing diapers so rich Nova Scotians can enjoy a tax break just isn't right.

"Reject it. Start over. This is not the way to go," he said.