PCs would halt tax cuts for N.B. business, rich

Last Updated: Friday, August 27, 2010 | 3:55 PM ET

CBC News

PC Leader David Alward walks into a campaign event in Fredericton on Friday. (CBC)

New Brunswick Progressive Conservatives would cancel planned tax cuts for business and high-income earners to help balance the provincial budget in four years, Tory Leader David Alward announced Friday.

Alward said the deficit of $749 million is almost unprecedented, and he worries about the debt, which stands at about $8.35 billion and is forecast to hit $9.5 billion next year.

"We will stop the reckless tax reductions that go far beyond what we can afford or are targeted on the wrong direction," Alward said Friday.

Liberal legislation has been passed that would lower the corporate income tax rate of 11 per cent to eight percent by July 2012. This would make the rate the lowest rate in Canada.

The Tories would halt the tax cuts at 10 per cent. And planned tax breaks for the highest income bracket would also be put on hold.

Alward said he could save $120 million over the next four years by withholding tax cuts from people who make an average of $450,000 a year.

New Brunswick taxes people earning more than $118,427 at a rate of 14.3 per cent.

The Liberals have legislated a plan for two tax rates by 2012. People earning more than $37,893 would be taxed at 12 per cent and those earning less than that at nine per cent.

Liberal Greg Byrne called Alward's promise "erratic" and said cancelling the legislated tax reductions could threaten investment in the province.

"When you talk to the CEOs, they look at what's happening in New Brunswick," Byrne said. "They're paying attention. They compare provinces, they compare the level of taxation."

New office to review waste

But when reporters asked Byrne how the economic spinoff from lower taxes would bring down the deficit he wouldn't say.

He said the Liberal deficit-reduction plan could include spending cuts in areas other than health, seniors and education.

But he wouldn't name a department or program that might see its funding slashed.

The Conservatives are vowing to trim the size of cabinet to 15 ministers, which would save $10 million annually. Liberal Premier Shawn Graham has 20 cabinet ministers around his executive table.

Alward would create a new office, called the Government Review Office, to cut government waste.

The Tory leader said he would cut "wasteful and unnecessary government spending" by two per cent but he did not provide specifics on what would be eliminated. Health, education and services to those in need would be shielded from the knife, he said.

Promises buyouts

The public service would also be reduced through attritition under a Tory government, Alward said. He said he would offer public servants early retirement, but it wasn't clear how many positions he would cut or how much money this would save.

The former Conservative government of Bernard Lord and current Liberal government also trimmed the bureaucracy through buyouts.

Donald Savoie, the Canada research chair in public administration and governance at the University of Moncton, said this week that the economy was the most pressing issue in the election campaign. He said the two main parties were not offering realistic plans to cut the deficit.

He said significant tax increases and spending cuts are needed to lower the deficit.