The chairman of the New Brunswick Business Council says a carbon tax could jeopardize the competitiveness of provincial industries.
While the New Brunswick Business Council is concerned about the impact of a carbon tax, Ed Barrett, says the group is pleased with the tax reform process that the province has undertaken.
“At this point I would say we are concerned that the carbon tax would leave New Brunswick in a non-competitive position,” says Ed Barrett.
The tax reform discussion paper released by the provincial government earlier this summer has suggested shifting the tax burden from income taxes to consumption-based taxes. It has proposed a simplified or flat personal income tax and an up to eight percentage point cut to the corporate income tax rate.
However, to make those cuts revenue neutral for the provincial government, the paper proposes increasing the HST by two points and implementing a British Columbia-style carbon tax.
“While we understand that the government feels it needs to have revenue neutrality, we do caution on a carbon tax,” said Barrett.
The business council also understands the need to reduce greenhouse gas emissions in the province.
“But it seems to us – because many of us do business across the country and have operations across the country – that we need to be careful not render New Brunswick operations non-competitive.”
While the business council – which represents some of New Brunswick’s most successful entrepreneurs and industrialists – is concerned about the impact of a carbon tax, Barrett said the group is pleased with the tax reform process that the province has undertaken.
“The tax regime in the province is too old to attract investment and to grow the province,” he said.
“I do think we’re on the right track in taking a look at this and seeing if we can do things in a different way.”
Barrett said the cutting corporate income taxes could boost New Brunswick’s economy.
“If we’re to develop a sustainable economy, if we’re to build self-sufficiency, which is a central theme of the government, then they need to look at the tax regime as an opportunity to seek investment,” he said.
“I won’t say it has to be a specific amount or if it should be five per cent or seven per cent, I think it’s appropriate that the government find ways to use the tax regime to foster economic development. They have limited tools to do that. They have to be creative with what they have.”
Charles Cirtwill, executive vice-president of the Halifax-based Atlantic Institute for Market Studies said its difficult to judge the precise impact of a carbon tax on competitiveness in the province without knowing exactly how it will be applied and will work.
“Any additional tax, whether its a carbon tax or any other tax, is going to reduce your competitiveness or basically change your competitive position,” he said.
“If … New Brunswick went ahead of everybody else by dropping its corporate income taxes and then added a carbon tax, presumably it would move back down the chain in terms of their competitiveness. Whether they’d be far enough ahead of everyone else in terms of competitiveness would depend on what the final rate is, what it applies against, what kind of exceptions there are.”
Julie Michaud, climate action coordinator for the Conservation Council of New Brunswick said provincial industries may find themselves at a competitive disadvantage if the province doesn’t have a tax on carbon or a cap and trade system in place.
That’s because as other North American jurisdictions develop such plans, they may penalize imports from states and provinces which don’t put a price on carbon, she said.
“We can sign on to these agreements and be an equal part in the design of how they are going to work or we can risk having these agreements harm our economy by penalizing our polluting industries.”