Finance

Discussion paper on New Brunswick's tax system released (08/06/04)

NB 831

June 4, 2008

FREDERICTON (CNB) - The government has announced the first formal review of provincial taxation in nearly two decades with the release of a discussion paper entitled A Discussion Paper on New Brunswick's Tax System. The paper presents a series of options as possible elements of a comprehensive restructuring of the province's tax system.

(Multimedia)

"The discussion paper presents options to restructure New Brunswick's tax system so that New Brunswickers can keep more of their hard-earned money, encourage new investment, and support the creation of more jobs," Finance Minister Victor Boudreau said. "It is based on the principles of competitiveness, neutrality, simplicity, balance, sustainable development, fairness, social development and fiscal responsibility.

Boudreau said that there are two key objectives in reviewing the tax system:

"I want to make it very clear: this discussion paper is a document designed to stimulate public discussion and to seek opinions and input from New Brunswickers," Boudreau said. "We are asking New Brunswickers to consider the nature of the tax system and how it should be structured to move every region of our province - north, south, east and west - toward self-sufficiency."

The options presented are:

A simplified personal income tax structure with a flat tax of 10 per cent of taxable income for all New Brunswickers, or two tax rates of nine per cent and 12 per cent. These options would show decreases of about 15 per cent in provincial personal income taxes for some New Brunswickers, while in other cases the decreases would vary from 30 per cent to 100 per cent for some lower-income earners.

Options to support New Brunswick families, so that the tax system helps parents deal with the cost of raising their children, including a new non-refundable child tax credit that reduces personal income tax payable by up to $400 per child, and a universal child-care benefit of $600 annually for every child under six.

The creation of a growth-oriented business tax environment by reducing the general corporate income tax rate from the current 13 per cent to 10 per cent, seven per cent or five per cent.

Establishing a carbon tax along the lines of the model being introduced by British Columbia to encourage energy conservation and the use of cleaner fuels, and reduce New Brunswick's output of greenhouse gases. Any such tax would have to be phased in gradually over several years, and include a reimbursement credit to offset the impact of such a measure on low-income New Brunswickers.

A rebalancing of New Brunswick's tax system to promote savings and increase income by reducing reliance on personal and corporate income taxes, and raising a larger proportion of provincial tax revenues through a modest increase of two per cent in the HST, bringing it back to the level it was at two years ago.

Boudreau said that the options outline in this discussion paper are intended to create a balanced approach to tax reform, an approach that would allow New Brunswickers to keep more of their earnings, and maximize opportunities for economic growth while allowing the province to continue to provide quality services to New Brunswickers in a fiscally responsible manner.

"I want to be clear that the options outlined in the discussion paper would benefit existing New Brunswick entrepreneurs and businesses looking to re-invest, grow and help attract outside investment," Boudreau said. "This would result in the creation of more jobs and wealth for the benefit of all New Brunswickers."

Boudreau also announced that a select committee of the legislature will hold public meetings and stakeholder consultations throughout the province. The committee will present its report to government in the fall of 2008.

"The rebalancing and restructuring of the tax system will affect all New Brunswickers," Boudreau said. "These meetings and consultations will provide an opportunity for New Brunswickers to express their views and interests in restructuring the tax system."

During the review of the provincial tax system, government will consider the options outlined in this paper, and the views expressed to the select committee.

Once the report from the select committee is submitted, a five-year plan will be developed to ensure that major changes to the tax system over this period are fiscally neutral through a combination of tax reductions, tax adjustments, and management of expenditure growth.

"Our objective is clear," Boudreau said. "A restructured tax system in our province could have major benefits not only now, but well into the future. It's tremendously important to the direction our province is taking, and we want to hear from all New Brunswickers. I urge all New Brunswickers to take the time to read the discussion paper or the summary document, and make your voices heard."

08/06/04

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

08/06/04