No promise on tax cuts

But Finance Minister Victor Boudreau isn’t promising to return it to New Brunswickers’ pockets.

During his capital budget speech yesterday, Boudreau said the province’s finances are in better shape than originally calculated and is now projecting a $78.9-million surplus for 2007-08 — more than double the original amount budgeted.

“At the time when we delivered our budget, it was based on information we had. Since that time there are things that improved: the province managed things well and we are headed toward a budget that is a little larger than predicted in March,” he said.

However, John Williamson of the Canadian Taxpayers’ Federation said Boudreau shouldn’t be so quick to credit his management of the province’s books.

“The New Brunswick government hasn’t managed anything well. Anyone can roll in and announce a budget surplus if taxes are high enough,” he said.

Williamson said the province should have taken the same approach as families, businesses and individuals in New Brunswick — balance their books by spending within their means and cutting costs.

“The provincial government was wrong to rush out a tax increase as opposed to trying to balance the budget internally without a tax increase,” he said.

Charles Cirtwill, acting president of the Atlantic Institute for Market Studies, said the surplus should go to paying down the province’s debt.

He also said now is the time for the Liberal government to prove that a single-year tax hike was only necessary to project a surplus — and that they won’t need to raise taxes again.

“Let’s see them live up to that promise,” he said.

In his 2007-08 budget, Boudreau introduced across-the-board tax hikes — the first New Brunswick sweeping income tax hike since 1994.

At the time, Boudreau said the tax increases were necessary to avoid a potential $400 million deficit as outlined in the Grant Thornton report commissioned by the Liberal government.

Yesterday Boudreau wasn’t offering any apologies for raising taxes, despite the now projected surplus.

“Projections are projections, they are good the day they are made, but the economy rolls on, the province rolls on, the government rolls on, these are things that change every day, every week, every month,” he told reporters.

The province actually anticipates receiving $120.2 million more than initially budgeted, thanks mainly to taxes and the federal government. But it also expects to spend an additional $78.4 million on unbudgeted expenses. However, part of those expenses includes a $35-million rainy-day fund that will be applied to the $78.9-million projected surplus if unused.

Boudreau said the province now expects to receive an additional $41 million in equalization payments, $30 million in minerals taxes, $22.5 million in corporate tax, $11.5 in conditional grants, $10 million in personal income tax and $10 million in harmonized sales tax.

However, expenses are also expected to increase, including an additional $14.5 million for regional projects, $14 million under a Business New Brunswick assistance program and an extra $10 million for regional health authority deficits.

“They are forecasting the worst winter in the last 15 years, who knows what kind of impact that will have on NB Power. There are plenty of factors like that, and there are still a few months in this fiscal year,” said Boudreau.

The finance minister wouldn’t say whether the surplus will allow him to offer New Brunswick some tax relief in next year’s budget.

“I’m not going to speculate what we’re going to do in four months’ time with that surplus.

However, we have been undertaking, as we speak, a pretty exhaustive look at our whole taxation structure, both business and personal, and we want to make sure that New Brunswick is more than competitive,” he said.

Opposition leader Jeannot Volpé said the projected surplus clearly shows the Liberals didn’t need to raise taxes.

Volpé pointed to Federal Finance Minister Jim Flaherty’s visit to Fredericton last week where he promoted the merits of lowering taxes.

“There was no issue at all but that was a way for them to find a reason to increase taxes — now we all know they were lying to New Brunswickers,” Volpé said of the Liberals. “There was no need to increase taxes.”