N.S. to cut small-business tax
Small businesses in Nova Scotia will see a tax cut of half a percentage point for the second year in a row when Finance Minister Graham Steele tables his budget April 5.
Steele announced the measure Tuesday during a pre-budget speech before the Halifax Chamber of Commerce.
The minister told the business audience the modest cut was aimed at making small businesses more competitive.
"We think it's a great move to support our hard-working small business owners," said Steele. "If we stick to our [deficit reduction] plan and our finances continue to improve, then more is possible in the future."
Businesses that are eligible will be able to apply the new rate of four per cent on the first $400,000 of their taxable income, starting Jan. 1.
Officials in the Finance Department said the cut would cost provincial coffers $5.9 million in 2012-2013, its first full year of implementation.
Steele said the deficit in the 2011-12 budget would be close to $370 million, the same figure projected earlier this year, but added the government was on track to balance the books in 2013.
"This budget follows through on the four-year plan we laid out last year," Steele said. "This budget will not reinvent the wheel or declare some new direction that you don't already know about."
Steele also said the province would actually register a surplus at the end of the current fiscal year that would be higher than the $97 million forecast last December.
The numbers met with the approval of Halifax Chamber of Commerce president Valerie Payn, who said the government appeared to be resisting the urge to spend, while sticking to a scheduled plan.
Although Payn said businesses would like to see their tax rate even lower at around three per cent, she said the promised cut on the heels of an identical one last year would help.
"There are many taxes, municipal, provincial and federal and it's the cumulative effect of all of them," said Payn. "So every little bit helps as it would in your own home."
Opposition calls for more cuts, faster
Both opposition critics said the business tax cut was a start, but said more was needed faster in order to make a difference to the province's business sector.
Liberal Leo Glavine said his party believed the confidence of small businesses would increase if the rate was lowered to one per cent.
"Private industry in this province is literally in a holding pattern and I think it's through the private sector that we're really going to grow the economy," said Glavine.
Progressive Conservative Allan MacMaster said the government could extend a better tax cut if the budget was balanced immediately.
However, Steele said that in calling for the budget to be balanced now, the opposition was failing to answer a key question.
"They have to explain where they will find $370 million in savings in health, education, social services and roads because that's where the money goes to," he said.
The small business tax cut is the latest in a series of measures made public ahead of the tabling of the spring budget.
The province had already announced it would trim funding to school boards by $17.6 million or 1.65 per cent, while holding the line on funding for health boards and municipalities.
Nova Scotia's 11 universities would also see a $14 million cut in their operating grants next academic year.
The spring session of the legislature opens Thursday with a speech from the throne, the NDP's third blueprint for the legislature since the party came to power less than two years ago.