Personal income tax hikes 'slap in the face'

Reaction to the Alward government's 2013-14 budget, which includes personal and corporate income tax hikes, has been swift and varied.

Corporate tax increases, tax rate for small business 'disheartening'

Gloria Hay, of Fredericton, says every penny the government takes is money that working families need. (CBC)

Reaction to the Alward government's 2013-14 budget, released on Tuesday, has been swift and wide-ranging.

Finance Minister Blaine Higgs is planning to make some of the largest tax increases in the province's history, including hikes in personal and corporate income taxes, worth a combined total of about $200 million.

Some families could see increases of hundreds or even thousands of dollars a year.

Gloria Hay, who just moved back to Fredericton from Alberta, says the massive hike was not the welcome she was hoping for.

"It's taking away from our hard-earned dollars — and it's very hard earned down here," she said.

Hay says every penny the government takes is money that working families need.

Starting July 1, personal income tax rates for people earning between about $40,000 and $75,000 will go up by about 22 per cent. Those making between $80,000 and $125,000 will see a jump of about 33 per cent.

Should have gone to referendum

Kevin Lacey, Atlantic director of the Canadian Taxpayers Federation, says the personal income tax hike could cost some families more than $1,000. (CBC)

Kevin Lacey,  Atlantic director of the Canadian Taxpayers Federation, calls the tax hikes a slap in the face for working families.

"The government has slammed the average taxpayer with huge new tax increases," Lacey said.

"If the government believes so strongly that taxes should have been raised, then they should have gone and had a referendum like the taxpayer protection pledge that the Conservative government passed."

The tax increase is being welcomed by some people in the province, such as Peggy Barrieau, of Fredericton.

"It's good. Anything that's going to go back into the people that live here and stay here and choose to make a home here when everyone is going out to Alberta," she said.

Will help narrow gap

Advocates for the poor also contend the personal income tax hikes for high-income earners are a good thing.

Sister Aurea Cormier, of the Common Front for Social Justice, says it will help to narrow the gap between the rich and the poor.

Cormier says the projected $5 million-increase in social assistance rates is something her group has been seeking for five years.

But she believes more money should have been allocated to alleviate poverty in the budget.

"If you take $5 million and you spread it between the 24,198 households, that gives them a raise of about $17 per month, so that's not much," she said. "They haven't had an increase since 2008, so this is not compensating for inflation," Cormier said.

Corporate hike welcomed over HST increase

Businesses in New Brunswick will also help shoulder the burden of fighting the provincial deficit, which is expected to hit  $479 million in the upcoming fiscal year.

The corporate income tax will increase to 12 per cent from the current 10 per cent, effective July 1.

Meanwhile, the small business rate remains unchanged at 4.5 per cent — well above the target rate of 2.5 per cent, said Richard Dunn, New Brunswick's senior policy analyst for the Canadian Federation of Independent Business.

"It is disheartening to see this government abandon its commitment to reduce the small business tax rate, which remains among the highest in the country," Dunn said in a statement.

The budget also lacked any mention of the government’s efforts to reduce regulatory burdens, which Dunn says is puzzling, given that improvements have been given considerable attention behind the scenes.

Some business organizations, however, saw the  jump in the corporate business tax as the lesser of two evils. The finance minister had in recent months floated the idea of raising the HST.

"Restaurateurs are breathing a bit of a sigh of relief because we were very concerned about an increase in the HST, which would hurt our customers and owners," said Luc Erjavec, of the Canadian Restaurant and Foodservices Association.

Jim Cormier, of the Retail Council of Canada, agrees.

"We had asked for no HST increase because that is a confidence tax and that’s a killer for retail. So he didn’t go forward with that so we were at least pleased with that," Cormier said.