By Daniel McHardie
The Liberal government is reviewing the way it taxes businesses, but an Atlantic think tank believes the province could be truly innovative by scrapping all corporate income levies.
Charles Cirtwill, the acting president and chief executive officer of the Atlantic Institute for Market Studies, said governments around the world are cutting taxes as a business incentive. Cirtwill said he doubts corporate taxes will even exist in a few decades, so he’s urging New Brunswick to get ahead of the curve.
“Innovation in tax policy is pretty straight forward: get rid of it as quickly as you can,” he said Friday.
Premier Shawn Graham committed Friday to forming a committee to examine business taxes. It will consist of major business players such as the New Brunswick Business Council and Canadian Manufacturers and Exporters.
The committee will examine on tax policies for major corporations in the finance, insurance and software development agencies.
Conservative MLA Kirk MacDonald, the opposition’s Business New Brunswick critic, said the Liberals are heading in the wrong direction with their business tax regime.
“Jurisdictions are getting increasingly more competitive with their tax regimes. We are the only jurisdiction in Canada perhaps the only jurisdiction in North America to have such significant tax increases, not just to the small business tax and to corporate and personal income tax.”
The former Conservative government had cut small business taxes from 6.5 per cent and had intended them to fall to one per cent in July. It had also slashed the general corporate rate to 12 per cent from 17 per cent. The Liberals cancelled the Tory promise to reduce small business taxes to one per cent from 1.5 per cent and then raised it to five per cent. The general corporate tax rate rose in the first Liberal budget to 13 per cent from 12 per cent.
The hope of erasing all business taxes doesn’t mesh well with the public comments made by the co-chairmen of the Self-Sufficiency Task Force. In its first discussion document released earlier this year, the task force said the province should move away from the regimen of broad-based tax cuts and focus on targeted relief for specific industries or companies that invest in improvements.
Graham said he is willing to examine the prospect of eliminating grants and subsidies in favour of tax holidays.
“If there are legitimate ideas that are put on the table that merit us to look at them definitely, yes, we want to build a self-sufficient province and if it means we forgo collecting taxes to see reinvestment in our industries to become more competitive over the long term then that is something our government is willing to do,” he said.
The AIMS president said he is encouraged to hear the premier talking about eliminating unnecessary government financial subsidies.
The Canadian Federation of Independent Business is willing to offer the Liberal government advice if it seeking innovative tax policy ideas.
“Here’s a tip: how about not raising taxes to attract businesses and also to encourage the current and existing businesses,” said Leanne Hachey, the CFIB’s Atlantic vice-president.
The CFIB executive said the premier’s announcement paid too much attention to attracting the “big boys” and did not appear to offer help for the small businesses that have built the provincial economy.
David Plante, the manufacturers and exporters’ New Brunswick vice-president, said there is a range of ideas the province could put in place to help his members, such as speeding up the time that a company can write off capital investments against its property taxes.
As well, Plante said the province must also remember that lower taxes will help create jobs.
“I think we absolutely have to remain competitive not only in Canada but right across the globe,” he said. “Improving the taxation and regulatory regimes are really key to attracting investment.”