by Ian Munro
AIMS Director of Research

I am thinking of moving to New Brunswick. Or I will be – if they go ahead with the bold changes outlined in a just-released green paper on taxation, blandly titled “A Discussion Paper on New Brunswick’s Tax System.”

Consider the list of options being offered:

  • lower, flatter and simpler personal income taxes;
  • income taxes where everyone gets a break and where the focus is on the family and on helping those who need help;
  • corporate taxes at the lowest level in Canada, and that allow small businesses to grow without fear of being penalized if they are too successful;
  • elimination of targeted tax incentives for favoured sectors and, instead, broad-based tax relief for businesses that takes politics out of the equation;
  • a general shift away from income taxes and toward less economically damaging consumption taxes, including the cautious introduction of a carbon tax;
  • a rebalanced and more equitable and accountable system of property taxation.

The paper raises the bar for any province in this region that wants to compete in the global economy. In fact, if implemented, the ideas proposed will raise the bar for jurisdictions around the world who compete for increasingly scarce labour and all too mobile capital. We all owe New Brunswick a debt of thanks – if it moves forward (talk is cheap, as they say).

The proposed options are wide-ranging – all taxes are on the table – and, in some cases, border on the radical, at least by Canadian policy-making standards. Moving to a 10-per-cent, flat personal income tax and a 5-per-cent corporate income tax rate is well beyond mere tinkering. In a novel and refreshing twist for Canadian public policy, the proposals align with the thinking of leading experts. Finance Minister Victor Boudreau and his officials are in step with substantial economic literature on taxation that recommends keeping tax rates low, keeping the tax base broad and simple, and favouring consumption taxes over income taxes.

One hopes that finance ministers elsewhere in the country with visions dancing in their heads of special tax rebates and reductions for everything from auto plants to kids’ skating lessons will take note.

But let’s not hand out the gold stars in New Brunswick just yet. Along with the bold proposals, there are watered-down options. The spicy 5-per-cent corporate income tax proposal, for example, could be swapped for milder 7-per-cent or 10-per-cent versions. The 10-per-cent, flat personal income tax may be supplanted by a dual-rate option.

This wouldn’t be the first time that a government has proposed a courageous fundamental change with the ultimate intent of settling for the more politically acceptable middle-of-the-road option in an apparent compromise.

Every now and again, a government comes out with a really good idea, and New Brunswick’s has done that with its taxation green paper. If self-sufficiency and prosperity are the goals, embracing the proposed tax reforms are significant steps in the right direction.

For the good of New Brunswick, let’s hope Mr. Boudreau and Premier Shawn Graham will push the envelope on this one. For the good of Canadians elsewhere, let’s hope their governments are paying attention.

The Atlantic Institute for Market Studies is an independent, public-policy think tank based in Halifax.