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(Mar. 19/09) New Brunswick’s decision to scrap a planned 2% increase to the HST is welcome news to the province’s 1,700 foodservice operators. The budget also lowers taxes for individuals and businesses and increases transparency in provincial and municipal property taxes.
CRFA lobbied hard against a proposal by the Tax Reform Committee to increase the provincial portion of the HST by 2% and was pleased to see the idea rejected in the province’s March 17 budget. CRFA argued that an increase would worsen the unequal tax treatment of food and decrease disposable income for consumers. The HST is applied to food purchased at restaurants, but not to the same or similar food purchased at grocery stores.
On the income tax front, the government announced significant cuts to personal income taxes by reducing the current four-rate, four-bracket structure to a two-rate, two-bracket system with personal income taxes set at 9% and 12%. This move will put more than $330 million back into the pockets of New Brunswickers each year. At the same time, corporate taxes will be cut from 13% to 8% and the small business tax threshold will increase from $400,000 to $500,000 annually.
Provincial and municipal property taxes will be made more transparent by curtailing automatic tax increases due to assessment growth that is higher than inflation.
Other budget initiatives include an infrastructure stimulus package, a government hiring freeze, a lay off of 700 civil servants and a two-year wage freeze for all public sector workers.
While these initiatives will result in a $440 million deficit for the province, the government intends to return to a surplus position by year four of their fiscal plan.
More information about GST and Harmonization
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