FREDERICTON – Government’s discussion paper on how to reform taxes will be released next week, and it appears the much-anticipated document will offer a number of ways to significantly reduce the amount of personal income tax New Brunswickers pay.
In an op ed column printed in today’s Times & Transcript, Finance Minister Victor Boudreau reveals that some of the options outlined in the document would allow personal income tax to be reduced between 30 per cent and 100 per cent, depending on an individual’s level of income.
“This is not tinkering around the margins of the tax system as you can see,” Boudreau writes. “It is making fundamental, transformational changes, which will result in New Brunswickers keeping more of their hard-earned dollars to save, spend and invest as they choose.”
As an example, Boudreau outlines an option that would see a single-earner with an annual income of $25,000 pay $359 less in income tax. Another option would see a one-earner family, with an income of $40,000, pay $1,801 less in income tax.
Boudreau, however, doesn’t state whether any form of taxes would need to increase in order for government to afford to cut income tax.
Since Boudreau announced the discussion paper, business groups have spoken out in favour of reducing the overall tax bill of residents.
“A competitive taxation regime is essential to not only attracting businesses, but to maintain the competitiveness of existing businesses,” said David Plante of the Canadian Manufacturers and Exporters.
A survey of the organization’s members across the country suggested higher taxes and regulatory costs are a challenge for 20 per cent of manufacturers.
Plante also said his organization is eager to hear what, if any, options are included in the document to help alleviate the rising cost of property tax, or if industry-specific tax incentives will be offered.
“We think that we have to create a made-in-New Brunswick solution that recognizes the realities for existing businesses as well as companies that may want to come in the province as well,” he said.
During his first budget, Boudreau announced across-the-board tax hikes. This year’s budget didn’t offer any tax relief but Boudreau promised to release a discussion paper outlining ways to improve taxation policies and announced fiscal and tax policy specialist Jack Mintz would serve as a consultant.
Mintz has said specific tax incentives aren’t as effective as more broad-based measures such as reducing the corporate tax rate.
Ian Munro of the Atlantic Institute for Market Studies said most economists would agree that reducing income taxes is good policy.
“They (taxes) reduce the incentive to work, they reduce the incentive to save, they reduce the incentive to invest,” he said. “You’re better off getting your taxes from consumption taxes.”
Following the release of the document, a legislative committee will tour the province to hear the opinions of New Brunswickers.
Boudreau says the two goals of the tax reforms are to ensure individuals can keep more of their money and to make the province more attractive to businesses.
“I think the idea of reducing income taxes and making up that revenue with sales taxes is a good one,” said Munro. “I think the idea of reducing income taxes and making up some of that with sales taxes, but overall reducing the tax burden, is even better.”
Andreea Bourgeois of the Canadian Federation of Independent Business said it’s vital the overall amount of tax a New Brunswicker pays decreases as a result of the changes in policy.
“I don’t want to see tax shifting from one tax bill to another. We are hoping to see a reduction in the actual tax burden,” she said.
Bourgeois said she’s pleased with Boudreau’s comments that any changes will also support existing small businesses in the province.
“I think that’s one of the most positive things I’ve heard,” she said.
Boudreau has faced criticism from both Conservatives and business groups recently for suggesting the province is considering introducing a carbon tax.
The minister still isn’t ruling out the possibility, but stresses the idea is still in the discussion stage and that a carbon tax would be phased-in over several years.
- Liberals raised taxes in first budget
- Liberals announced tax study in second budget
- Renowned tax policy specialist Jack Mintz is acting as a consultant
- Gov’t has mused about possibility of a carbon tax
- Gov’t says tax policy will include options to lower income taxes
- Public consultation will be held following release of the document