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The New Brunswick (NB) government released their 2016 provincial budget on February 2, 2016. This budget includes increases in many of its sales and income taxes for businesses and consumers alike, which the government has implemented in efforts of reducing its deficit for the upcoming fiscal year.
Most significant of these changes is a two per cent increase in the provincial portion of the HST effective on July 1, 2016. That is to say, NB is going from a 13% HST to a 15% HST. This increase is expected to garner an additional $200 million to the provincial coffers.
To minimize the effect the HST increase will have on lower-income individuals and families, the NB government will provide a refundable provincial tax credit to qualifying persons. However, this credit will be prorated for families or individuals who earn $35,000 or more and is reduced to zero when an individual earns $50,000 or more or in the circumstance where a dual-income family with two children earns $75,000 or more.
New Brunswick has also increased its corporate income tax from 12% to 14% in order to match the rates in Newfoundland and Labrador. However, this increase does not affect businesses that pay only the small business income tax rate.
Also announced was the elimination by New Brunswick of its top provincial tax rate and a reduction to the 2nd top rate to 20.30. The result of these changes mean that the provinces top marginal tax rate for employment and other income is roughly the same as the rate applicable for Quebec. This essentially removes NB as the province with the highest top marginal tax rate.
The real property transfer tax, a measure which affects both businesses and consumers, increases from 0.5% to 1% of the property value effective April 1, 2016. The tax due to the NB government in relation to transferring a deed has effectively doubled.
Lastly, one of the “sin” taxes is significantly increasing. Consumers of tobacco products in NB are subject to an immediate tobacco tax increase of 3.26 cents per cigarette or per gram of loose tobacco (effective on February 3, 2016) and an additional increase of 3.26 cents effective on February 1, 2017.
With the remainder of Canadian provincial budgets due to be presented in the very near future, it remains to be seen whether other provinces will join the sprint to increase taxes or if they will choose to maintain their course in the marathon for the fiscal year.
For more information please contact Heather Weber, Indirect Tax Services Leader [email protected], or an MNP Tax Advisor in your region.
Related Topics:HST; Tax Rates; Government; Income Tax
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