NB Budget – Corporate Tax Cuts / Budget Surplus / Social Assistance InvestmentMarch 13, 2020
As the minority government in New Brunswick attempts to remain in power, it tabled a good news budget, featuring tax cuts for businesses. It also promised additional expenditures to increase social assistance. The budget is balanced and includes a long-term plan to pay down the province’s debt. There had been some uncertainty regarding the ability for the government to pass the budget and avoid an election. However, recent announcements of support from the People’s Alliance Party and the Leader of the Green Party make it likely that the budget will pass.
RCC is generally pleased with the budget. Despite some calls from Opposition Parties to vote against the budget, it is evident that Parties have a limited ability to fight an election only eighteen months after the last election. Furthermore, all Parties are concerned with the optics of forcing an election while the general public is worried about the COVID-19 outbreak.
Surplus and Debt:
- The surplus is projected to be $92.4 million for 2020-21. This will be the fourth consecutive balanced budget for the province. The fiscal ‘belt tightening’ approach of the past year resulted in a $97.8 million surplus for the 2019-2020 budget.
- The province’s net debt currently sits at almost $13.8 billion for a population of 767,827 people. The net debt is projected to decrease by $129.3 million by 2021.
- The province currently spends $631 million per year to service the existing debt.
- The net to GDP ratio is projected to improve from the current 36.3% to 34.7% in 2020-21.
Of Note to Commercial and Industrial Property Owners:
- Over a four-year period, beginning in the 2021 taxation year, the government will provide $43 million in tax relief for commercial and industrial property owners. The tax rate will decrease by 8.25 cents per year until 2024. This will decrease the rate from $2.1860 per $100 of assessment to $1.8560. Once fully implemented, the three largest shopping malls in the province are projected to save a combined $1 million per year. Large box stores are projected to save between $20,000 and $80,000 per outlet.
Of Note to Pharmacy Retailers:
- $1.5 million will be added to the vaccination program so that all New Brunswickers will have access to free flu shots to protect themselves and their families. An Immunization Registry will also be launched.
Other Budget Items of Note:
- Revenue is expected to grow at 3.4% for 2020-21 (pending impact of COVID-19).
- The province’s economy is expected to grow by 1.2% for 2020-21 (pending impact of COVID-19).
- Over a four-year period, beginning in the 2021 taxation year, the provincial property tax on apartment buildings will see a 50 per cent + reduction (from $1.233 per $100 of assessed value to $0.5617). This has been called a double tax as it is currently levied on top of a municipal tax on rental properties.
- Funding was increased for social assistance rates. The rates will also be indexed annually based on the change in the Consumer Price Index.
- The previous government did not submit a carbon pricing plan to the federal government and thus, the federal backstop was imposed. The current government received federal permission to implement a New Brunswick carbon pricing plan at 6.6 cents per litre at the pumps, starting on April 1, 2020. This is the same as the current federal backstop, but the NB government will cut its gas tax by 4.6 cents, creating a net two-cent increase. The tax on diesel will decrease by 6.05 cents per litre.
Despite the potential for turbulent economic times ahead, Retail Council of Canada (RCC) will push for government to stay the course and continue to provide New Brunswickers with good fiscal management, competitive tax rates and strategic social investments.
If you have any questions or concerns, please don’t hesitate to contact: Jim Cormier, Director (Atlantic) at: firstname.lastname@example.org or (902) 422-4144