In Brief: As the federal finance minister was announcing tax cuts, reporters were turning to AIMS acting President Charles Cirtwill to explain the impact. He says the plan to cut taxes by $60 billion over the next five years will help small and medium sized businesses, and the low corporate tax rate can lead to a competitive advantage globally.

OTTAWA – New Brunswickers are poised to have more money in their pockets in the coming months after federal Finance Minister Jim Flaherty announced broad-based tax relief Tuesday.

Thanks to a swelling federal surplus, the federal government will cut the GST by one percentage point, bringing the rate to five per cent on Jan.1, 2008. The GST cut will cost the federal Tories about $5.5-billion.

The lowest marginal tax rate, currently 15.5 per cent, has been cut to 15 per cent retroactive to last Jan. 1. That translates to a savings of just over $200 a year for someone earning $40,000. Under Flaherty’s new plan, the basic personal exemption also rises retroactively, up to $9,600 from $8,929. The exemption will rise further to $10,100 on Jan. 1, 2009, which will target lower income earners in the province.

Altogether, Flaherty’s update will save Canadians $60 billion over five years as a result of the changes. Dave Murrell, an economist at the University of New Brunswick, said he was surprised that Flaherty introduced the tax reductions all at once. He said the update was likely timed to calm concerns around a rising Canadian dollar

“We’re a province with a lot of cross-border shopping and a little relief in that the GST is now down two per cent can help a bit,” he said. Murrell said the power is now in the hands of consumers, who can decide how to spend those added savings.

“There will be more money in our pockets to spend or save,” he said. “People like me are saving like mad for retirement and it doesn’t really matter if it is GST cuts or personal tax cuts — we have dollars to spend or save.”

New Brunswick businesses also stand to gain from fast-tracked corporate income tax reductions – cuts that have been unprecedented in recent history. The government will bring the corporate tax rates down to 15 per cent by 2012, from more than 22 per cent today.

Charles Cirtwill, president of the Atlantic Institute for Market Studies, said the move will help small and medium-sized businesses – the bread and butter of New Brunswick business.

“There is reference to encouraging other provinces to come up with an overall corporate tax rate of 15 per cent and as we’re primarily exporters, if we can get in a position where the total tax is at 25 per cent, it will give us a competitive advantage on global stage,” he said.

“Here in Atlantic Canada, that’s going to mean a lot.”

New Brunswick Finance Minister Victor Boudreau is hoping the feds’ willingness to spend will play well for him in negotiations with Ottawa.

Boudreau is working on a deal with the federal government to contribute financially to the province’s goal of becoming self-sufficient by 2026.

“When money is not an issue, it makes the other obstacles less intimidating,” he said. “We’ll have to continue our talks, but for New Brunswickers as a whole, the reductions are a positive.”