The largest one-time tax-reduction package in the province’s history was enacted in the legislature Tuesday, assuring businesses and individuals that – as promised in last month’s budget – taxes would be slashed over the next four years. The amendments to the province’s income tax act show the government is dedicated to lowering taxes, said Charles Cirtwill, executive vice-president of the Atlantic Institute for Market Studies, a Halifax-based economic think-tank. “This puts meat behind the words,” he said. “If the next election goes awry for the Liberals it will make it harder for any subsequent government to change the tax plan.” “From the perspective of people looking to come work in New Brunswick or businesses wondering if they should invest in New Brunswick,” Cirtwill said, “the four-year plan increases the level of predictability. It tells the province’s neighbours that they are serious about tax reform.” The Liberals confirmed they are dropping the province’s general corporate income tax rate from 13 per cent to eight per cent by 2012. They are also moving personal income taxes from a four-rate, four-bracket tax scheme to a two-rate, two-bracket system. By 2012 the two rates will be set at nine per cent and 12 per cent, respectively. Despite the $741-million deficit this year, the Grits say tax changes will provide $143.5 million in personal and business tax savings, with total savings reaching $380 million by 2012. But Cirtwill said the tax changes passed in the legislature highlight the government’s missed opportunity. “They should have made the changes to the HST at the same time,” he said. “It’s far better to raise the consumption tax while lowering income taxes. It would have helped control the long term borrowing of the government and keep the provincial deficit in line.” However, Kevin Gaudet, national director of the Canadian Taxpayers Federation, said he was pleased they decided not to increase the consumption tax or implement a carbon tax. “We fully support the plan and the decision not the raise the HST,” he said. “Given the sweeping nature of the tax reforms we think they are significant and it’s nice to see the plan codified into law. New Brunswick will become a friendlier jurisdiction for business and attractive to international and local companies.” The Liberals also made changes to the small business investor tax credit and the labour-sponsored venture capital tax credit, increasing the availability of venture capital for small and medium-sized businesses. These measures, along with the forestry tax credit and the extension of the high-energy use tax rebate, will be implemented in cabinet in the coming weeks and do not require legislative changes. The Canadian Manufacturers & Exporters group called the province’s new tax scheme a “bold stroke.” “These measures will help position New Brunswick as the investment province with the lowest income taxes in the country,” said David Plante, vice-president of the New Brunswick division. “Reform of the taxation regime was long overdue,” he added. “This will stimulate investment and maintain jobs because it sets the province apart from the competition. When we do turn the corner and the economy picks up we’ll be ready to take advantage of the intense competition out there for the investment dollar.”
