Six Big Highlights in the New Brunswick Provincial Budget
FREDERICTON – The Groundhog Day budget release is making us feel like we’re starting all over again with HST and corporate tax rates going back to previous years’ highs.
The 2016-17 budget aims to return to a balanced budget by cutting back on spending and introducing new revenue measures. This will come most notably at the expense of both individual and corporate taxpayers.
In the weeks leading up to the budget release, we were led to expect choices between the implementation of highway tolls, an increase in HST and corporate tax rates and cuts to civil service positions, education and healthcare spending.
Here’s what we got:
Two Per Cent Increase to HST
Presented as the lesser of evils, the budget outlines a two per cent increase to HST. This puts the rate higher, with Nova Scotia in the same boat at 15 per cent, than any other HST rate in Canada.
This hike will come into effect on July 1 of this year and is a return to the rate from 1997 to 2006.
The budget introduces a refundable HST credit of $300 for individuals, $300 for spouses, $100 per child under the age of 19 and $300 for the first child of single parent families.
Two Per Cent Increase to Corporate Income Tax
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Corporate tax hike[/mks_pullquote]
New revenue for the province will also come from an increase of two per cent in general corporate income tax, putting it at 14 per cent. Small businesses will remain unaffected.
Reorganization/Elimination of Civil Service Positions
Savings through spending cutbacks will mostly come from a reorganization and downsizing of 1,300 senior and middle managerial civil service positions. This is expected to save $46.4 million.
No Highway Tolls
Highway tolls were deemed an unrealistic and inefficient plan both in terms of the time tolls would take to implement and a lack of consensus on locations.
Protection of Education (with minimal changes)
Education spending will remain mostly unchanged though over time the number of teachers overall will be decreased with fewer new teachers replacing those retiring.
Protection of Health Care (again, minimal changes)
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Health Care Spared[/mks_pullquote]
Health care spending will also remain largely unchanged, with some consolidation and increases to administrative efficiency.
“This budget came down to difficult choices. In the end, we chose to protect education and health care and reduce the size of government because that’s what we heard from New Brunswickers,” Finance Minister Roger Melanson said.
The province hopes to improve our financial situation by $589 million, with $296 million saved in spending cutbacks and $293 million brought in with new revenue. The optimistic plan is to return to balanced budgets and have a surplus by 2020-21.