N.B. business groups applaud budget's tax cut package

Three New Brunswick business organizations are applauding the Liberal government's budget for its blend of personal and income tax cuts, designed to drag the province out of recession.

Two years after panning the Shawn Graham government's first budget for its tax hikes, all appeared to be forgiven as the province's business community is embracing the Liberals' new four-year plan, which will see corporate tax rates fall to the lowest in Canada and significant personal income tax cuts.

'Being able to tout New Brunswick as having the lowest corporate income taxes in the land will certainly... resonate throughout boardrooms from coast to coast.' — David Plante, Canadian Manufacturers and Exporters

Mark Arsenault, chief executive officer of the New Brunswick Forest Products Association, delivered a simple message on behalf of many of the province's largest employers that "all tax cuts are good in our mind."

Arsenault acknowledged many in the struggling forestry sector would have liked to see the corporate tax rate dip to eight per cent earlier than the planned date of 2012. But the budget's overall direction is uplifting for the cash-strapped industry, he said.

"If you look at the budget as a whole, I don't think the provincial budget is going to solve a global crisis, an economic crisis," he said.

"Keeping that in mind, the tax cuts will help. I think it will make a difference, because we are all struggling right now. I have a lot of members who are hanging on right on the edge, so as our other costs are increasing, if you can decrease in other areas it is helpful."

Alberta and British Columbia have corporate tax rates of 10 per cent, meaning that in 2012, if all goes to plan, New Brunswick will have the lowest rate, at eight per cent. The provincial government is anticipating the budget's mix of tax cuts and new tax credits to save businesses $20 million this year and $44 million in fiscal 2012-13.

David Plante, vice-president of Canadian Manufacturers and Exporters' New Brunswick division, said his organization would have preferred to see targeted measures to help struggling manufacturing companies. But he said the budget's "bold" tax measures will put the province on a solid economic footing as it comes out of the recession.

"Certainly, we are all well aware a large part of the economic downturn in our country, at least, is a perception issue," Plante sad.

"So being able to tout New Brunswick as having the lowest corporate income taxes in the land will certainly go a long way in improving that perception. The measures taken today will resonate throughout boardrooms from coast to coast."

Small businesses embrace tax cuts

The Liberal government's strongest critics in the business sector have traditionally been small businesses. In Finance Minister Victor Boudreau's first budget, he rolled back promised tax cuts for small businesses in the province, sparking a heated rebuke from many business owners.

Andreea Bourgeois, the director of provincial affairs for the Canadian Federation of Independent Business, graded Boudreau's latest budget a B-minus. She said the tax reform package was enough to earn the Liberal government a higher grade, if not for the $740-million deficit included in the fiscal plan.

As part of its tax package, the provincial government will increase the income threshold where small businesses begin to pay taxes to $500,000 from $400,000. Bourgeois said that move will save her members "a couple of thousand of dollars a year" and is a huge improvement from where she thought the province was heading last year.

"I think it is a positive message: 'We are having a plan, we are having some small-business cuts,' " Bourgeois said.

"And at least they are acknowledging the small business. When we think about last July when they were having the [all-party legislative committee hearings on] tax reforms, small business was nowhere on the agenda."

Politicians and labour groups pick apart budget 

The province's budget is not getting universal applause, however. Opposition parties and labour unions are voicing their displeasure with the Liberal spending plan.

Conservative MLA Bruce Fitch, the Opposition finance critic, said the tax cuts are just replacing the tax increases in the first Liberal budget. And, he said, the province is directing the biggest tax cuts in the wrong direction.

"If you look at the percentage cuts, it is favouring the wealthy. And the poor, middle, working class, they are only getting a one per cent cut overall in the tax rate… and the upper end is actually getting a five per cent" tax cut, Fitch said.

"So you are getting a bigger savings in the higher-income earners.... So that is a concern."

New Democratic Party Leader Roger Duguay, who does not hold a seat in the legislative assembly, said he worries the Liberals are pilling too much debt on the province between the $265-million deficit in 2008-09 and the projected deficit of $740 million in the current fiscal year.

"That means it will be over a billion dollars. I think it is fiscally irresponsible from the government," he said.

Tom Mann, the executive director of the New Brunswick Union, said several of the program cuts outlined in the budget could create public safety hazards, such as the decision to eliminate the commercial vehicle enforcement program. The trade-offs that come with the cutbacks are not worthwhile, he said.

"For the average New Brunswicker this is a false hope budget," Mann said.