Development: Move could help differentiate region from other jurisdictions, minister says

BATHURST – The provincial government is considering establishing tax-free zones in areas near the ports in Dalhousie, Belledune and Bas-Caraquet.

Under the program, manufacturers in those areas would be exempt from corporate taxes, property taxes or other forms of taxation.

The idea is mentioned in the 54-page plan for northern New Brunswick released Saturday in Bas-Caraquet, but is short on details.

Donald Arseneault, the Liberal MLA for Dalhousie-Restigouche East and the minister responsible for the plan, said in an interview Monday that his government is still looking at different options.

“It’s still preliminary on what type of taxes we are talking about,” he said.

“But the whole idea is to differentiate ourselves from other jurisdictions, to attract new investors.”

Arseneault said a tax-free zone is one element that could help the region grab a larger slice of the growing market for pre-assembled products and building components, known as modular construction.

The plan says that modular components are a particularly strong area for potential growth. It estimates expansion of this sector could create 1,000 jobs in northern New Brunswick over three years.

The plan targets the three ports for three different sectors of modular fabrication: Dalhousie for forestry-related products, Belledune for metal-related industries and Bas-Caraquet for shipbuilding.

Arseneault said the idea for a tax-free zone was recommended by several business groups and consultants.

David Campbell, an economic development expert who recently wrote a report on northern New Brunswick, says a tax-free zone could effective, but would also be tricky to execute.

“First of all, you’d have to get the federal government involved,” he said.

“So that’s a big challenge.”

In addition, he said oftentimes major corporations don’t pay the bulk of their corporate taxes in New Brunswick.

If scrapping corporate tax brings in 100 well-paying jobs, Campbell said, then the province would more than make up its lost revenue.

“If you can create 100 good jobs, you get far more income from personal income tax anyway,” he said.

“Corporate tax is low to begin with in Canada. That’s just the way it is.”

The Atlantic Institute for Market Studies recently released a study on tax-free zones in various jurisdictions that also determined they would be a valuable tool for the Maritimes.

Charles Cirtwill, president of the Halifax-based think-tank, says it could potentially help lure businesses to northern New Brunswick.

He said a tax-free zone could help differentiate the province from its competitors, but he cautioned that the high price of labour in New Brunswick will make it difficult to compete against other jurisdictions in a global market.