Tuesday, May 5, 2009

N.B. tax cuts aimed at wealthy are a 'rebalancing of the system:' Mintz

A leading Canadian tax expert says the New Brunswick government's tax reform plan will bring some balance to the system, even in light of recent criticism that the wealthiest are getting the biggest savings.

A recent CBC investigation showed that 1,300 of New Brunswick's wealthiest citizens will receive the biggest benefit from the new four-year plan unveiled by the Liberal government in its March budget.

Jack Mintz, a professor and director of the University of Calgary's school of public policy and a consultant on the province's tax reform discussion document, said it's important to remember that a large share of taxes are paid by the very wealthy.

"It may have been, that at least in my view, that many of the provinces of Canada over the years, as well as the federal government, had really until 2000, had probably gone too far in taxing upper income individuals and skilled labour to their own detriment," Mintz said.

"And there's been some rebalancing of the system. And perhaps we're getting to the point where we won't need to do this in the future."

The four-year plan offers $323 million in personal tax cuts, and $60 million in corporate tax cuts.

Under the four-year tax plan, New Brunswick will have two tax brackets by 2012. People earning less than $37,893 will be taxed at a rate of nine per cent and those earning more will be subject to an income tax rate of 12 per cent by the end of the four years.

Tax plan good for N.B.

Mintz said this tax reform plan will be good for New Brunswick in the long run even though the province expects to run a deficit of more than $740 million this year and plans to stay in the red for several more years after that.

Mintz said the government will have to consider raising the harmonized sales tax or cutting back on other tax credits to make up for it.

"Those kinds of questions [on raising additional revenue] could be considered," he said.

"And also on the resource royalty side, I think there is certainly some potential for the government to raise more money with respect to potash taxation and other things where they own the resource and should make sure they're getting some of the rents back that reflects their ownership."