NB Budget: Taxes Going Up
FREDERICTON–The government of New Brunswick will be taking a bigger bite out of the business community through a host of new measures that will add $230 million in tax revenue to the government coffers.
When these measures are implemented, New Brunswick will have some of the highest rates of corporate tax, personal tax and consumption tax in Canada.
Corporate Income Tax Goes Up
The government of New Brunswick will increase the general corporate income tax rate from 12 to 14 per cent. That will give New Brunswick one of the highest corporate tax rates in Canada, equaling Newfoundland and Labrador and lower than only Nova Scotia and PEI.
This will generate an additional $25 million in new revenues. The government says businesses paying only the small business income tax rate will not be affected by this increase.
HST Goes Up
As was widely expected, the provincial portion of the HST will increase by two percent, effective July 1, 2016, to total ten per cent. The combined tax rate will then be 15 per cent, equaling Nova Scotia as the highest rate in Canada.
The HST is expected to generate about $300 million in revenue each year.
The government will offer an HST rebate to low-income New Brunswickers. Those with a family income less than $35,000 per year will receive a full rebate, while two individuals with a combined income of less than $50,000 or a family of four with an income of less than $75,000 will receive a portion of it.
The HST rebate will eat up $100 million of the $300 million the tax hike is expected to generate in new revenue each year.
Personal Taxes Stay Up
The provincial government has also responded to a new top marginal income tax rate of 33 per cent for taxable income introduced by the Liberal government in Ottawa, which came into effect on January 1. It will drop the top marginal tax rate to 20.3 per cent for taxable income over $150,000.
But don’t celebrate just yet. That compares to the top provincial tax rate of 17.84 per cent in 2014.
For incomes greater than $150,000, the combined federal-provincial tax rate in New Brunswick will be 49.3 per cent. Incomes greater than $200,000 will face a combined tax rate of 53.3 per cent for 2016, compared to 46.84 per cent for both income levels in 2014.
That means New Brunswick has one of the highest tax rates on higher incomes in the country, just behind Nova Scotia and Quebec.
Real Property Transfer Tax Goes Up
Buying a property in New Brunswick will get more expensive as the province is raising the Real Property Transfer Tax. The tax, a one-time payment on the purchase of a property when the deed is registered, will increase from 0.5 per cent to 1 per cent effective April 1, 2016.
For a home costing $164,000, for example, this represents an additional cost to the buyer of $820.
Bank Taxes Go Up
The provincial government will increase the financial corporation capital tax rate from four per cent to five per cent for banks, effective April 1, 2016.