New Brunswick announced a suite of new tax cuts Tuesday intended to attract people from other jurisdictions and spur housing construction.
A series of new bills would see the income tax rate cut for most brackets, provincial property tax for non-owner-occupied housing reduced and property tax bills for newly-constructed apartments phased in.
Premier Blaine Higgs says the changes are intended to attract people to the province and continue the record-breaking population boom of the last two years, by making the tax rates for earners on the higher end more competitive.
“Our goal is to be a desired location on tax structures, on cost structures,” he said.
“People are looking at our province so we are continually looking for ways to make it more attractive.”
All tax brackets above the second will see a reduction, with the second-highest bracket being eliminated entirely.
The rate reductions are as follows:
- Income between $44,887 and $89,775 will go from 14.82 per cent to 14 per cent
- Income between $89,775 and $145,955 will go from 16.52 per cent to 16 per cent
- The fourth bracket will be eliminated and taxed at the level of the third bracket, meaning income between $145,955 and $166,280 will go from 17.84 per cent to 16 per cent
- Any income over $166,280 will now be taxed at 19.5 per cent instead of 20.3 per cent
The cuts will provide the greatest relief to those making over $145,955 a year, something Green Party finance critic Kevin Arseneau says is demonstrative of who the government is focused on helping.
“Once again this government has helped people that have problems making their latest payment on their Porsche and not people that have trouble eating, paying for their housing, paying for their basic needs, paying for gas to go to work,” he said.
The other changes announced Tuesday are intended to spur housing construction.
One would see the 50-per cent reduction in provincial property tax paid on non-owner-occupied housing moved up from 2024 to next year. The other would phase in property tax payments for those building multi-unit housing over three years.
The latter measure is intended to ensure more housing is built according to Jill Green, the minister of Service New Brunswick and minister responsible for housing.
“It’s acknowledging that they do not have the revenues while building the building so we are working with them to increase the supply. It’s acknowledging that it takes time to get the units in place and get them occupied,” Green said.
But despite the tax relief for landlords and developers next year, Green said a decision on if the province’s temporary cap on rental increases will be extended into next year as well. When the cap was introduced in March’s budget, finance minister Ernie Steeves admitted that the market hadn’t responded to crushingly low vacancy rates as quickly as the province had hoped.
Green wouldn’t say if the situation in the province had changed since March.
“We know there is a supply issue, there absolutely is here in New Brunswick and that’s contributing to this crisis and we’re analyzing all pieces associated with this and making a strategic decision,” she said.
Liberal finance critic Rene Legacy said it’s hard to argue against tax cuts, and is particularly interested in seeing details on the building incentive program, but worries that the cuts aren’t being balanced with protections for those who are vulnerable.
“It can’t be the excuse for solving everything — ‘We cut taxes so everything is good now’ — there is still a big need of relief in the province and I didn’t hear anything in the throne speech other than we’re cutting taxes,” he said.
The new cuts were teased in last week’s throne speech and last month when Steeves announced the province was now projecting a $135 million surplus for this year, $100 million more than expected.
The government has been under pressure to expand spending after posting a $777-million surplus last year and a surplus over $400 million the year prior.
Higgs said the new tax cuts are the government’s way of responding to higher-than-expected revenues through the first several months of this fiscal year.
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