Halifax – It’s about time! The New Brunswick government is no longer talking about tax cuts, it’s doing it. The three year plan to lower taxes announced in today’s budget will do more for New Brunswickers than infrastructure spending or other government largesse.
“Now that’s stimulating”, says AIMS Executive Vice President Charles Cirtwill, “absent significant rethinking by most other provinces in Canada and especially by the rest of the Atlantic Provinces, by 2012 New Brunswick will be the place to live, work, raise a family, start and invest in a business.”
The Atlantic Institute for Market Studies (AIMS) submitted a proposal to the New Brunswick government on tax reform in July of 2008 (A Fork in the Road . . .on the Road to Growth). It explained how lowering income tax will provide a boost for investment and job creation.
“There’s no doubt the New Brunswick government could have been a bit bolder and gone a bit further, but this tax plan goes beyond what any other government in the region is doing, or has done,” says Cirtwill.
“While our proposed flat tax rate would have been better, the New Brunswick government’s decision to go with two rates is much better than the existing system and better than every province in the country except Alberta.”
Cirtwill says a faster and larger increase in the basic personal exemption would have done more for low income earners. “A higher basic personal exemption is a better, more effective, more affordable anti-poverty tool than is a higher minimum wage.”
The decision not to raise the provincial portion of the HST is a missed opportunity says Cirtwill. “An increase in the HST could have been used to increase the basic personal exemption further and faster, or it could have funded a provincial HST rebate for those in need of more direct assistance. Consideration could even have been given to using some of that revenue to match the federal Universal Child Care Benefit.”
A consumption tax increase might also have been a way to address fears that the tax cuts will be saved, not spent. “Knowing the HST was going up by 2% in six months might encourage you to make that purchase today, especially if you know that tomorrow, you are going to get even more tax savings,” says Cirtwill.
“Overall this plan for lower taxes will do more for New Brunswick than any of the economic plans currently being talked about by the other provincial governments. It will be interesting to see any ripple effects this might have as other provinces table their stimulus budgets.”
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