April 14, 2009
FREDERICTON (CNB) - Legislation was introduced today by Finance Minister Victor Boudreau to implement The Plan for Lower Taxes in New Brunswick, and guarantee that tax savings identified in the plan will be delivered from 2009-12.
The four-year plan, which represents the largest one-time tax-reduction package in the province's history, was introduced in its entirety in the legislature, and by 2012 will provide more than $380 million annually in tax relief to individuals and corporations.
"By legislating all four years of lower taxes, we will provide greater protection for taxpayers," said Boudreau. "We are delivering exactly what we have promised, and we are very pleased that the lower tax plan will help individuals, families, students, and seniors, as well as small and medium-sized businesses and large corporations."
Changes proposed to the New Brunswick Income Tax Act will replace the existing four-rate, four-bracket personal income tax structure with two rates of nine per cent and 12 per cent, and a two-bracket structure. This two-rate system will be phased in over time, and will be fully in place by 2012.
The benefits of these lower taxes will begin to be seen on July 1, 2009, when source deductions will reflect tax savings. In addition to lower personal taxes, enhancements to the Low-Income Tax Reduction program will provide tax relief to low- and middle-income earners.
The legislation will ensure that every New Brunswicker continues to be protected from inflation, and will go further. Protection for taxpayers will come by increasing the brackets by a minimum of two per cent every year, or by the rate of inflation, whichever is greater.
The Medical Expense Tax Credit for Dependent Relatives is being improved by doubling the eligible amount that can be claimed on behalf of such a dependent relative, to $10,000 from $5,000.
The Low-Income Seniors' Benefit will increase to $300 from $200 in 2009, and to $400 in 2010, fulfilling the government's commitment to reach this target during this mandate. This will provide more than $8 million in savings for seniors.
Funding for the $2,000 benefit for first-time university students will be redirected to the Debt Reduction for Timely Completion Benefit program, which will provide assistance to graduates with a high student debt.
The Plan for Lower Taxes in New Brunswick also provides for significantly lower taxes for businesses in New Brunswick. The general corporate income tax rate is being reduced to 12 percent from 13 per cent, effective July 1, 2009, and will be further reduced each July 1 until the rate reaches eight per cent on July 1, 2012.
Significant tax relief is also being provided to the small business sector. The small-business limit is increased to $500,000 from $400,000, effective Jan. 1, 2009. With this increase, New Brunswick is now tied for the highest small-business limit in Canada.
In addition, the New Brunswick Labour-Sponsored Venture Capital Tax Credit and the Small Business Investor Tax Credit have been significantly enhanced. The initial benefits of these enhancements rest with individuals. However, the real benefits will be in the increased availability of venture capital for small and medium-sized business.
Those measures from The Plan for Lower Taxes in New Brunswick that do not require legislative change, such as the Forestry Industry Investment Tax Credit and the extension of the High Energy Use Tax Rebate, will be implemented by cabinet in the coming weeks.
"These positive changes to our tax system will leave more money in the pockets of New Brunswickers to save, invest and spend as they choose," said Boudreau. "This will help keep the province on the road to self sufficiency, and foster an economic climate where our residents can choose to stay here, while those working elsewhere will have opportunities to return."
In 2009-10 there will be savings of about $144 million for New Brunswick individuals and businesses. These savings will increase to more than $380 million annually by 2012-13, when the tax cuts are fully implemented.
Complete details of The Plan for Lower Taxes in New Brunswick may be found online.
MEDIA CONTACT: Marc Belliveau, communications, Department of Finance, 506-453-4138.