'Double taxation' cut will energize private sector, say N.B. business leaders
Province reducing tax on buildings like rental properties by 50%
Rental property owners and business officials say new tax cuts announced by the Progressive Conservative government Tuesday will help stoke the New Brunswick economy and spur construction.
Finance Minister Ernie Steeves announced a 50 per cent reduction in the provincial non-owner-occupied property residential tax over a four-year period starting in the 2021 taxation year.
Owners and developers have long sought to scrap the so-called "double tax" which levies a provincial tax on top of the municipal tax for buildings like rental properties and cottages.
Willy Scholten, president of the New Brunswick Apartment Owners Association, said his group has been lobbying government officials on the issue since 2004.
He believes the move will lead to new construction.
"We have a lot of issues right now with not enough supply of rental apartments in the province, and a lot of our association attributes a lot of that to this double taxation," Scholten said following Steeves's address in the legislature.
"We don't have outside people coming to the province and saying this is a good place to do business."
The tax rate will drop from $1.233 per $100 of assessed value to $0.5617 — or about 14.04 cents per year until 2024.
The owners' association has proposed phasing the tax out completely over a three-year period, but Scholten said this is a step in the right direction.
"We hope that they continue after here to the eventual full elimination, so we are no longer offside with the rest of the country," said Scholten, adding New Brunswick is the lone Canadian jurisdiction to impose such a tax.
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Could the tax savings be passed onto tenants? Scholten said it's too early to tell.
"It's not a full elimination and we don't know what's going to happen with assessments either along the way," he said. "So we'll have to wait to see what happens with our property tax bills."
The PCs also plan to reduce the non-residential property tax rate — including commercial and industrial buildings — by 8.25 cents per year until 2024. That will decrease the rate from $2.1860 per $100 of assessment to $1.8560.
The $10.2-billion provincial budget projects a $92.4-million surplus and to reduce the net debt by $129.3 million. The budget is buoyed, however, by a $200-million increase in federal transfer payments.
"We have to, beyond balancing the budget, give back," Steeves told reporters.
"We thought [the tax reductions] were ones that would help businesses and, ultimately, help a lot of New Brunswickers and, ultimately, help the economy of New Brunswick."
'You have to focus on the private sector'
The budget struck a chord with People's Alliance Leader Kris Austin. His party has long argued against double taxation for non-owner-occupied properties.
"If you want true economic growth, you have to focus on the private sector," he said. "The best way to that is tax reduction and deregulation."
Austin said all three Alliance members will vote in favour, while Liberal Leader Kevin Vickers maintained that his party will vote against the budget in an attempt to topple the government.
Green Leader David Coon told reporters his caucus — and its three crucial votes — has reserved a decision until meeting to discuss.
Also included in the budget is the Higgs government's carbon pricing plan. It will be set at 6.6 cents per litre at the pumps — same as the federal backstop — but the Tories will cut the New Brunswick gas tax by 4.6 cents, creating a net two-cent increase.
The government has not passed its carbon tax legislation and if the budget is defeated and an election is called, it won't get the chance, meaning the federal price will be in place on April 1.
David Duplisea, CEO of the Saint John Region Chamber of Commerce, said if that's the case, it will make New Brunswick less competitive with neighbouring provinces like Nova Scotia.
Encouraged by the private-sector support, Duplisea said there isn't anything in or not in the budget worth toppling the government over.
He said many of his 700 members wanted the tax breaks in one form or another, and this creates a "positive investment climate."
"These items … we have been asking for these and we're confident that this will help to spur investment in our respective regions and in the province as a whole," Duplisea said.
Both the Saint John and Fredericton chambers of commerce lauded the government for reducing the net debt and balancing the budget.
Krista Ross, CEO of the Fredericton Chamber of Commerce, specifically highlighted the double taxation policy in a statement Tuesday.
"This will make business in New Brunswick more competitive and give us a chance to build economic momentum, which in turn will allow government to further reduce debt and deliver more services," Ross said.
"In the coming years, this will be even more important as we cannot expect to receive large increases in equalization payments on an annual basis."
With files from Jacques Poitras and Ed Hunter