The provincial 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 reduce the amount of personal income tax New Brunswickers pay.
In an opinion article in today’s The Daily Gleaner on page B7, 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 income.
“This is not tinkering around the margins of the tax system,” 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 another tax would need to be increased 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 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.
In 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.
Charles Cirtwill of the Atlantic Institute for Market Studies said most economists would agree that reducing income taxes is good policy.
“They 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.
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.