A promised cut in Nova Scotia’s small business tax was welcomed Monday by the Canadian Federation of Independent Business.
“Tax relief is always good news to our members,” said Leanne Hachey, the federation’s Atlantic vice-president, in an interview.
Nova Scotia Finance Minister Graham Steele said Tuesday’s budget will cut the provincial small business tax by a half percentage point to 3.5 per cent.
It’s the third straight year the government has lowered the tax by half a percentage point.
Steele said the measure will save small businesses $10 million annually.
The reduction will go into effect Jan. 1.
Hachey said the province has definitely made progress on reducing the tax burden for small business but suggested there was still room for further business tax relief.
And she said the federation, which represents about 5,000 small and medium-sized businesses in Nova Scotia, would like to see more action on other tax fronts that affect businesses and consumers.
“There’s room on personal (income) and sales taxes,” she said.
Promised tax cuts in the Nova Scotia budget will offer little relief from the hike in the harmonized sales tax that the provincial government implemented two years ago, the opposition parties fumed Monday.
The Liberals and Progressive Conservatives were sharpening their knives on the eve of the spring budget, which Finance Minister Graham Steele has said will provide “modest but real” income tax reductions.!Steele has not offered any details but stressed the cut would be small and wouldn’t be offered to all taxpayers.
Liberal Leader Stephen McNeil said whatever impact the tax cuts in the budget will have will be diminished by the two percentage point increase in the HST put in place in 2010.
“He (Steele) has been offering pennies back to Nova Scotians,” McNeil said Monday in an interview.
McNeil said the tax cuts won’t be meaningful because the government hasn’t done enough to address the rising cost of living, pointing to escalating energy and gasoline prices as examples.
He said they were part of a “government charade” meant to position them for an election call he expects will happen next spring.
Tory Leader Jamie Baillie said while any tax cut is welcome, he believes the budget will nonetheless end up “frustrating” Nova Scotians.
He said the government should eliminate its projected $260.8-million deficit immediately.
“Balance the budget now, because that deficit is the one thing that stands between us and true tax relief,” he said.
Steele said Monday that the government has a plan to balance the books by next year, reiterating that they would not be reducing the HST in the budget.
“We do what we can afford,” Steele said, adding that the HST increase was vital.
“It is necessary in order to continue to provide important public services.”
Steele said the two percentage point increase was worth about $360 million each year to provincial coffers.
“So it kind of goes without saying that before you can reduce the HST by that amount you have to be running surpluses. Our plan has us getting back to balance next year and then running surpluses after that.”
Finance Department figures show that the total revenue generated from the HST has increased since the 2010 hike from more than $1.1 billion in 2009 to a forecast of more than $1.5 billion at the end of fiscal 2011-12.
But Don MacIver of the Atlantic Institute for Market Studies said the original increase in the HST put the province at a competitive disadvantage.
“It sends the wrong message,” said MacIver. “It simply says we can manage to maintain our spending levels by adding a little bit here and a little bit there in terms of our tax take.”
The budget is also expected to include further cuts to the province’s education and health systems.
School boards have been told they will have to deal with an overall funding cut of 1.3 per cent in 2012-13 because of a continuing decline in enrolment, while health districts are looking at an overall reduction of three per cent.