Richest New Brunswickers get biggest tax cuts: CBC review

The New Brunswick government's income tax reduction plan will give the biggest benefits to a small group of the province's wealthiest citizens, a CBC News review shows.

'It's not many people at that income level and they are getting a great, great savings.' —Roger Haineault, tax specialist

The group, which includes just over 1,300 of the top business executives, medical and legal professionals, senior government officials and retired millionaires will split more than $30 million a year in tax savings when the plan is fully implemented in 2012, about 10 per cent of the entire program.

Finance Minister Victor Boudreau introduced a massive tax reduction program in his March 18 budget, promising more than $300 million in savings for all taxpayers once the plan is fully rolled out in 2012.

But a review of government documents explaining the plan's details and Canada Revenue Agency taxation data for New Brunswick shows that high-income earners will reap the greatest rewards.

Roger Haineault, a New Brunswick tax specialist, said special benefits flow to the high-income group because their tax rates will be cut the most.

"It's not many people at that income level and they are getting a great, great savings," Haineault said.

New Brunswick has four income tax brackets. High-income earners, those making more than $250,000 a year, currently pay most of their taxes inside the highest bracket.

But that bracket is subject to the biggest rate cut under Boudreau's plan — 33 per cent —  and high-income earners will save the most as a result.  By contrast, the lowest income bracket is being cut by 11 per cent.

Tax changes aimed at higher incomes: economist

Rod Hill, an economist at the University of New Brunswick, said savings concentrate themselves at the highest income levels because of the way tax cuts are structured.

"Basically one per cent of taxpayers, the people over $150,000, are getting between 15 to 20 per cent of the total tax savings," Hill said.

According to the Canada Revenue Agency, New Brunswick's 1,310 top earners declared an average of  $464,988 in income on their tax forms in 2006 and will benefit mightily from Boudreau's plan.

By 2012, the reduction to upper income taxes in the province will be so great, Department of Finance figures show single tax filers earning $500,000 a year will save $26,747 on an annual tax bill and will pay 23 per cent less than the average charged in the other nine provinces.

By contrast, New Brunswick residents making $35,000 will save just $349 from the tax reductions and will still be paying more than the national average.

Changes to reward skilled workers, professionals

Boudreau said the policy is designed to reward the highest-earning people the most because the province is trying to attract skilled workers and professionals.

"I don't know of a specialist or a family doctor that makes less than $250,000 a year and if want to attract those people we have to make sure that New Brunswick is attractive for them in terms of how they file their income tax," Boudreau said.

"As well, if we want to attract people with entrepreneurial spirit here that may come and invest in businesses in New Brunswick or start new businesses .... [and] create jobs, we do need to attract people in those higher-income brackets," Boudreau said.

Boudreau raised income taxes in his first budget two years ago, calling tax cuts by the previous government of Bernard Lord irresponsible. 

"Tax reductions made over the past number of years are not sustainable," he told the legislature in that budget address.