Government Floats HST Credit Program
FREDERICTON–Another day, another big hint on what will be in New Brunswick’s upcoming provincial budget.
An increase to the Harmonized Sales Tax (HST) has been one of the top options floated by government to address a more than $500 million gap in the province’s budget. The government will unveil its new budget on Feb. 2, the culmination of an extensive “strategic program review” exercise.
“We’ve been through consultation throughout the province for the past year. More and more as we get closer to the budget day, New Brunswickers are starting to formulate an opinion where they would like to see the government move when it’s there to make some choices,” New Brunswick’s Minister of Energy and Mines Don Arseneault told media in Saint John on Thursday. “One of those options that seems to keep coming back over and over again in increasing the HST by 2 per cent.”
An HST increase from the current 13 per cent to 15 per cent could generate up to $300 million per year in new tax revenues. The HST is a “value added tax,” something that many economists characterize as a regressive tax, meaning that lower income individuals end up paying a higher share of their income with the tax than do wealthier individuals.
To address this concern, the government today released details of an HST credit for low and middle-income New Brunswickers.
Under the proposed credit program, and assuming the HST increase is included in the budget, anyone with a family income of less than $35,000 per year would receive the full credit. It would be equal to $300 per adult and $100 per child. The credit would be higher for a family headed by a single parent.
Arsenault said the rebate would cost 100 million dollars.
“We need to understand that it’s going to be hard maybe on some low income families. This is one of the programs that we feel that if we are going to move on HST, it’s important that we have a rebate for low income [families],” said Arsenault. “And I have to say this is very much more generous than the rebates we see in Nova Scotia.”
The credit would be reduced by two cents for every dollar of income above $35,000. Individuals earning less than $50,000 per year and families with two children and a combined income of under $75,000 would receive some form of rebate payment.
“A credit would decrease the revenue associated with an HST increase, but it would help those who need it most,” said Health Minister Victor Boudreau, who is heading up the government’s program review, in a statement. “We want New Brunswickers to be aware of the credit option that we would consider as part of any potential decision about the HST.”
The HST was set at 15 per cent in New Brunswick from 1997 to 2006. The federal government lowered its HST rate in 2008 resulting in a combined tax rate of 13 per cent in New Brunswick.
Nova Scotia has already increased its HST to 15 per cent.