The New Brunswick government introduced its pre-election budget with no tax increases and nothing controversial. This is not a surprise given that the province will be headed into a provincial election in September 2014.
The province is facing a $500 million deficit for 2013 and is not projecting a budget surplus until 2017-2018.
The government announced an enhancement to the Small Business Investor Tax Credit, which will allow New Brunswick corporations and trusts to be eligible for a 15 percent non-refundable corporate income tax credit on eligible investments up to $500,000. This translates into a tax credit of up to $75,000 for New Brunswick corporate and trust investors who invest in eligible small businesses in the province. The government hopes that this will open a new pool of capital to small businesses.
The government will also create a new tax incentive program for Community Economic Development Investment Funds where local people can pool resources and keep capital funds working in New Brunswick. The government will further enhance the Small Business Investor Tax Credit to provide individual, corporate and trust investors with an equivalent non-refundable income tax credit for investing in a registered community economic development fund.
RCC congratulated the government, not only for the budget but for the pre-budget announcements, which included:
- A provincial drug plan for uninsured New Brunswickers which will not be funded by industry. It will be funded by government and the user.
- A commitment to reduce red tape by eliminating 20% of the province’s regulations. This accompanied a commitment to eliminate one regulation for every new regulation.
Despite the positive budget, RCC has reminded government that taxes were increased in the last budget. RCC has called on the government to commit to reversing these tax increases, once the deficit has been eliminated.
Other budget items of note:
Government has committed to introduce fiscal accountability legislation, which will require deficit reduction and an annual multi-year fiscal plan.
Government will also introduce legislation to mandate the release of quarterly fiscal updates and to mandate the Auditor General to report on the province’s finances 60 days in advance of each fixed election date.
There will be a 2% increase in the budget for the Department of Health in order to pay for wage increases and the New Brunswick Drug Plan for Uninsured.
The government has kept its commitment to slow the increase in government expenditures. Over the past four years, government expenditures have increased by $200 million, whereas in the four preceding years, expenditures increased by over $1 billion.
Budget cuts have occurred in virtually every government department except for Health.
Gross Domestic Product for 2013-2014 only grew by 0.1% and the province is expecting a slight improvement to 1.1% for 2014-15. Retail sales were flat in 2013 at only 0.2%.
If you have any questions or concerns, please don’t hesitate to contact: Jim Cormier, Director (Atlantic) at: [email protected] or (902) 422-4144.