Monday, August 10, 2009

New Brunswick's Less Optimistic Tax Savings

Much fanfare accompanied the New Brunswick government's tax cuts that took effect July 1 of this year. After the dust settled, it appears that less money is returning to the province's residents than was originally advertised.

Premier Shawn Graham promised a "pleasant surprise" to residents on their pay stubs beginning in July. While there have been some changes for the better, they are far below what the premier promised. According to leading tax analysts, the tax cuts are as much as 25 per cent less than promised.

While the tax cuts will verify based on individual income, many residents have said that the net difference is so negligible as to not have any effect on their habits.

The provincial Department of Finance does admit that the figures quoted by the premier included a reduction from an old Progressive Conservative government tax break that takes effect every January 1, beginning back in 2001.

The current government's 2009 budget included numerous budget cuts to various departments and a two year wage freeze for public sector employees. As both these items were unpopular, though necessary in order to tackle a large provincial budget deficit, it was hoped that the tax break would soften the blow. The budget included the first part of an economic stimulus package by adjusting both personal and corporate tax rates. By 2012, the province will have two personal income tax brackets. The maximum tax will be 12 per cent. In the meantime, residents feel that they have not been adequately compensated for the budget cuts.

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