New Brunswick Budget: Corporate and Personal Tax Increases but No HST Increase / No Highway TollsPrint
The New Brunswick government tabled its 2013-14 budget featuring corporate and personal tax increases. Following RCC’s advocacy in the pre-budget consultation process, the government did not increase the HST and did not implement highway tolls.
Communicate to the New Brunswick government the concerns of RCC members regarding corporate and personal tax increases. Commend the New Brunswick government for listening to RCC’s advocacy of not increasing the HST or implementing highway tolls.
RCC aggressively advocated against the government’s proposed idea of adding highway tolls and increasing the Harmonized Sales Tax (HST) by two percentage points.
The New Brunswick Business Council’s executive director backed a plan to increase the HST by two percentage points and to increase corporate income taxes to 2008 levels.
RCC attended the pre-budget consultation with Minister Higgs and stressed the opposition of the retail sector to corporate and personal tax increases until such time as government finished its recent efforts to rein in the excessive government spending, which occurred under the former Liberal government. RCC also advocated for government to show leadership and demand a more productive public service, before such time as asking for more from the private sector. RCC strenuously opposed any government notion to raise the HST and to implement highway tolls.
Given budget pressures, the New Brunswick government decided to raise personal and corporate income taxes. Specifically,
- Government will rescind the former Liberal government’s personal and corporate income tax cuts. On July 1, 2013, the rates will return to their levels from 2006 and will bring in an additional $136 million in 2013-14, $198 million in 2014-15. Even with the change, personal income taxes will still be lower in New Brunswick than they are in Quebec and the other Maritime provinces.
- Corporate income taxes will increase on July 1, 2013 from ten percent to twelve percent. This change is anticipated to generate $17 million in additional revenue in 2013-14 and $22 million in 2014-15. At 12%, New Brunswick will still have the lowest general corporate income tax rate in Atlantic Canada.
- Government will suspend scheduled future reductions of the Small Business Income Tax Rate. This tax rate currently sits at 4.5%.
Other items of note for the retail sector included:
- The tobacco tax will increase from seventeen cents per cigarette to nineteen cents per cigarette. It will also include a seventy-five percent increase in the tax on cigars. This change is effective immediately and is expected to bring in an additional $15 million in revenue.
- The price of generic drugs will be reduced by 10 per cent to 25 per cent of brand price effective June 1, 2013, and the dispensing fees paid to pharmacies will be adjusted to specify frequency of dispensing timelines for various pharmaceuticals.
- Government investment in the New Brunswick Road Improvement Fund (Capital and Ordinary Accounts) will be cut from $906,189,000 in 2012-13 to $408,296,000 in 2013-14. The vast majority of this cut will be seen in the capital account.
- The Department of Health is anticipating an increase in revenue from its food premises licenses and sewage system application and installation licenses from $815,000 in 2012-13 to 835,000 in 2013-14
- The government is anticipating revenue from New Brunswick Liquor Corporation (ANBL) to remain stable, increasing from $162,500,000 in 2012-13 to $162,700,000 in 2013-14.
- To help retain workers, the government is introducing the ‘One-Job Pledge’ initiative that is offering employers an improved wage incentive when they hire a recent post-secondary graduate in a job related to his/her field of study. Details will come at a later date.
The following are general highlights of other items of note in the 2013-14 New Brunswick Budget. The majority of these items do not specifically affect retailers but are included as general points of interest:
- Budget deficit is now projected to be $478.7 million. Excluding an unusual, one-time pension expense of $110 million, the operational deficit would actually be $368.7 million. The New Brunswick government has stated that unless the economy improves significantly, the government will not be able to keep its 2010 campaign promise to balance budget before the 2014 election.
- Government projects a $102 million deficit for 2015-16 and they anticipate that the economy will gain momentum in 2014.
- Overall Departmental spending will only increase by 2.5%. Government has reduced spending across Departments by over $230 million.
- Government is continuing to reduce the size of the public service, which will continue until 2014-15. They have been targeting a reduction of 500 employees per year and last year, they exceeded this goal by an additional 137 employees. Many of these reductions have occurred through attrition.
- Government will continue implementing Lean Six Sigma methodology throughout government departments; they will be instituting an Attendance Management Program and they will be changing the Public Service Pension Plan to a shared risk pension model.
- There will be zero growth in the province’s health care budget and an increase of less than one percent in strategic infrastructure spending.
- Government will be implementing a quarterly scorecard to update New Brunswickers on the government’s progress in implementing its agenda.
RCC spoke with the Premier and Minster Higgs and expressed support for the efforts made by the government to rein in spending and for listening to RCC’s advocacy regarding HST and highway tolls. RCC expressed disappointment with the increase in corporate and personal income taxes as well as the reduction in highway spending. However, RCC understands that even with these changes, the tax rates in New Brunswick remain more competitive than in neighbouring provinces.
RCC will continue to monitor any details emanating from the New Brunswick Budget. Should RCC members wish to discuss the New Brunswick budget, Jim Cormier, Director (Atlantic) for RCC would be happy to oblige.
If you have any questions or concerns, please don't hesitate to contact Jim Cormier at [email protected] or (902) 422-4144