The new, New Brunswick government introduced its first budget today featuring no HST or corporate tax increases and no road tolls. There will be an increase in fuel taxes of 1.9 cents per litre and 2.3 cents per litre on diesel fuel. Generally, this is a good news budget for retailers given the government’s significant fiscal challenges. However, this year’s budget alluded strongly to the likelihood of tax increases and possible road tolls in next year’s budget.
The deficit for 2014-15 is $255.4 million, which is an anomaly, due to a one time, unexpected federal transfer payment of $170 million. For 2015-16, the deficit is projected to be $476.8 million, which will include the creation of a $150 million contingency reserve to protect the province against unforeseen circumstances.
Expenses are expected to grow by 1.5% over revised 2014-15 estimates.
Of note to Retail Council of Canada’s (RCC) members, there was not a word of the New Brunswick Drug Plan. It appears that the status quo will be maintained on this file with government funding a more limited drug program for uninsured New Brunswickers as opposed to the one proposed by the former government.
Other budget items of note:
Government will improve its Small Business Investor Tax Credit rate for individuals from 30% to 50%. The enhancement will increase the maximum tax credit from $75 thousand per year to $125 thousand per year for individuals who invest in eligible small businesses in the province. The credit is projected to provide $5 million in annual tax relief.
The New Brunswick Dividend Tax Credit will be decreased from 5.3% to 4.0% (retroactive to January 1, 2015) to match the new small business corporate income tax rate.
There will be tax breaks for seniors or their families to renovate their homes. This program will be introduced in the 2015 tax year with details to be confirmed.
The fuel tax increase of 1.9 cents per litre / 2.3 cents per litre on diesel will be implemented at midnight on March 31, 2015. Government estimates that this increase will provide $28.2 million annually to provincial coffers. The combined total of federal and provincial gasoline taxes along with motive fuel tax rates will be 25.5 cents per litre. New Brunswick will now have the same gas tax rate as Nova Scotia while still being lower than the combined rate in Quebec and Newfoundland and Labrador.
The government will create two new personal income tax brackets to target the richest New Brunswickers. Those with an income between $150 thousand and $250 thousand will see their top rate tax increase from 17.84% to 21%. Those earning greater than $250 thousand will see their top rate tax increase from 17.84% to 25.75%.
There were diametrically opposed announcements of education plans to improve literacy while also cutting teaching positions. There was also an announcement to provide additional funding for economic development in Northern New Brunswick and the Miramichi area.
The budget mentioned earlier announcements related to the government’s elimination of the Department of Healthy and Inclusive Communities, Efficiency New Brunswick and the Energy Institute. There was also mention of the province’s new Youth Employment Fund, which will help up to 1,500 young New Brunswickers obtain work experience and training.
The budget made numerous references to the government’s Strategic Program Review, which continues to meet with stakeholders to discuss areas in which the government can find savings and/or increase revenue. The review will be completed in 2015, which will likely pave the way for tough decisions regarding tax increases in next year’s budget.
RCC will be meeting with the New Brunswick’s Minister of Finance on April 2, 2015 to discuss the budget and continue RCC’s call for government to continue making the necessary cuts to government before considering tax increases.
If you have any questions or concerns, please don’t hesitate to contact: Jim Cormier, Director (Atlantic) at: [email protected] or 902-422-41