Finance

Finance minister's statement on tax review (08/12/17)

NB 1840

Dec. 17, 2008

EDITOR'S NOTE: The following statement in response to the report of the Select Committee on Tax Review was issued today by Finance Minister Victor Boudreau:

Last week, the Select Committee on Tax Review presented a comprehensive report to the New Brunswick Legislature. I thank the members of the committee on the excellent job they did in engaging New Brunswickers from around the province, and for the analysis and thoughtful recommendations they presented.

I also want to thank the hundreds of New Brunswickers - individuals, businesses, social groups and others - who took the time to provide the committee with their thoughts and ideas on New Brunswick's tax system.

The committee sought input on the government's Discussion Paper on New Brunswick's Tax System, which outlined a fundamental rebalancing of the provincial tax system, reducing reliance on income taxes, and moving to a greater reliance on consumption taxes as a key policy direction to achieve greater economic prosperity and self-sufficiency.

In large measure, the recommendations contained in the report indicate a broad acceptance of this general principle: "Respondents unanimously agreed that it was time to take a serious look at tax reform and take bold actions while ensuring fair and just treatment of all residents. Tax reform was seen as a means to an end - that of building a stronger economy that retains our young people and provides economic opportunity for our residents - and not an end in itself."

This clearly identifies the rationale for tax reform, and it is a vision that government shares. It is a vision that government also believes must become reality if we are not only to achieve self-sufficiency in the long term, but also if we are to weather the current economic downturn and position the province for a strong recovery.

Two weeks ago, I announced a strategic four-point plan that will allow us to do just that. We will make public services more efficient and affordable; invest in strategic infrastructure; improve access to capital; and lower the tax burden.

As a government, we want to make New Brunswick a leader in economic development. We want to create jobs and wealth in our province; and provide opportunities for our young people to work here and make New Brunswick their home and the place to raise their families.

Most importantly, we also want to bring New Brunswickers home - those who in recent years have moved to other jurisdictions, such as the western provinces, to work. To do this, we need to create jobs and economic opportunities right here in New Brunswick. We need to ensure that we have the fundamentals in place.

Since taking office a little over two years ago, our government has made bold changes. We have reformed our health-care system in an effort to provide a more patient-driven and sustainable system for the benefit of all New Brunswickers. We have reformed our education system, again to put the needs of the end user - the students - first. We are already starting to see the benefit of some of these education reforms through better test scores.

As well, this past summer we began a major overhaul of our post-secondary education system, the first such reform in decades. The key elements of that reform, along with recently announced capital expenditures of more than $160 million over the next two years to upgrade our community colleges and universities, will provide significant improvements in the system. This will go a long way toward helping to graduate students, ready to work in a range of areas from Energy Hub projects to entrepreneurial and research activity throughout New Brunswick.

In the current economic climate, it is also imperative that we help stimulate spending, investment, jobs and growth throughout the province, as we are doing with record, two-year investments of $1.2 billion in infrastructure development. All of our strategic capital investments are intended to support New Brunswick businesses and individuals and lead us out of the economic slowdown as soon as possible.

Today, our government begins the next step with the broad outline of our taxation reform package. I want to underline once again the value of the input we've received from New Brunswickers on the key elements of taxation. New Brunswickers will see a number of the recommendations they have put forward on tax reform incorporated in our tax reduction package.

This government understands that tax reform must be sensitive to the current economic climate, the fiscal realities we face, and long-term stability in the tax system. This is why we are listening carefully to the views of New Brunswickers and why the restructuring of the province's tax system will be undertaken with those views in mind.

New Brunswickers were clear in their comments to the committee regarding the carbon tax, and I am pleased to announce that our major tax reduction package, to be conveyed in full detail in our next budget, will not contain a carbon tax.

The key elements of our tax reduction package include gradual, yet significant, reductions in personal income tax, as well as a target of a single-digit general corporate income tax rate. These reductions will begin in 2009, and will be fully phased in by 2012. It will help us get through the economic slowdown more quickly, and as importantly, position New Brunswick as one of the most attractive jurisdictions for economic investment in all of Canada.

As part of our major tax reduction package, government is committed to reducing corporate income taxes even further than the federal government's suggested 10 per cent rate. This will help encourage economic growth and investment in small, medium and large businesses across New Brunswick, and uniquely position the province as a highly competitive location for business.

With such a positive tax regime in place, we will be certain to aggressively promote New Brunswick as the place to be - now and for generations to come.

The committee's report recommended lower personal income taxes and lower corporate income taxes. The committee concluded that to pay for these tax reductions, government should consider increasing the HST. This option was put forward not simply as a way to raise revenue, but as a means to make a bold change in the provincial tax system. This change would allow us to generate economic growth and attract businesses to create wealth and jobs so that we can provide all New Brunswickers with opportunities to grow and prosper.

It is clear that New Brunswickers want lower personal and corporate income taxes. While the options are limited, government is working tirelessly to find ways to deliver these lower taxes. Government can, as the select committee recommends, increase the HST. Government can carefully manage expenditures and government can use the revenue generated by the economic growth associated with tax reform. All these options will be weighed and considered in detail before our tax reduction package is presented in March 2009.

The report also presented suggestions to reform the property tax system. Government will continue to analyze the property tax recommendations presented by the committee. Government is looking carefully at improving the degree of transparency and accountability to taxpayers.

I look forward to providing the full details of our major tax reduction package to all New Brunswickers as part of our next provincial budget in March 2009.

08/12/17

MEDIA CONTACT: Marc Belliveau, communications, Department of Finance, 506-453-4138.

08/12/17