Susan Holt, of the New Brunswick Business Council, says raising the HST by one point would generate an extra $125 million in revenue a year. (CBC)

The head of the New Brunswick Business Council says it's time for the provincial government to increase the HST and corporate income tax to help reduce the provincial deficit.

But not everyone agrees that's the way to strengthen the provincial economy.

Susan Holt, the president and chief executive officer of the business group, says the province is paying $662 million every year in interest alone on the province's estimated $10 billion debt.

"We're not going to have a long-term ability to invest in the the important areas of our province if we don't get this under management," she said.

Holt says says raising the HST by one point would bring in an extra $125 million a year.

"The business council by no means is suggesting that this increase in revenues from an HST increase and an increase to the corporate income tax rate should be used to allow additional spending," she stressed.

"That's been a problem in Nova Scotia. We need to see our debt decrease, we need to see spending managed."

The NDP calls the proposals interesting and plans to include them in a comprehensive tax and economic policy being developed in advance of the 2014 election, officials said.

Kevin Lacey of the Canadian Taxpayers Federation says it's naive to think the government would use the revenue to pay down the debt. (CBC)

But Kevin Lacey, Atlantic director of the Canadian Taxpayers Federation, argues it's naive to think the government would use extra revenue on the deficit.

"We can't keep throwing taxpayers under the bus every time the government overspends," he said.

"For too long we see the government spent too much on administration. And the HST increase that Miss Holt is talking about raising is going to come on the backs of taxpayers that are already struggling."

Businesses would also pass any corporate tax increases on to consumers, Lacey said.

Instead, he'd like to see an end to government handouts to businesses, he said.

Lacey has previously suggested the government also consider selling off Crown-owned assets, such as NB Liquor or the provincial plane.

New Brunswick’s projected deficit has almost doubled to $356 million because of falling government revenues, Finance Minister Blaine Higgs announced in November.

Higgs, who is scheduled to begin a round of pre-budget consultations across the province on Thursday, has suggested the only way out of the fiscal hole is more cuts.

Auditor General Kim MacPherson said in December the province’s debt has grown by $3.3 billion, or roughly 60 per cent since 2007.