Up to 6,000 N.B. taxpayers to save $9 or less from $70 million tax cut package

Tax data compiled by the Canada Revenue Agency from 2020 suggests at least two-thirds of the 200,000 people the New Brunswick government says will benefit from $70 million in income tax cuts planned for next year will get less than the $310 average amount being advertised.

That includes up to 6,000 taxpayers named as beneficiaries of the policy who will save $9 or less from the changes.

In the Legislature on Wednesday, New Brunswick Finance Minister Ernie Steeves was pressed for details on who would receive what from a plan announced this week to cut tax rates for those who earn more than $45,000 in taxable income per year.

The province has said 200,000 people above that income level would  receive an "average benefit … estimated to be about $310'' by cutting rates in the top four income brackets, but under questioning, Steeves offered little further information on how the $70 million will be divided up among different income groups.

"It is true that the more you make, the more you will be helped by these tax cuts," Steeves said in response to a question about how much high income earners will receive.

"But do you know what? The more you make, the more taxes you pay."

After question period, reporters fared little better obtaining more details, and Steeves repeated the "average $310" benefit message.

While the minister wasn't elaborating much beyond that, New Brunswick tax data on the public record did offer some clues.

The tax rate reductions being proposed are structured to benefit no one who reports taxable income below $45,000, which in 2020 (the latest year figures are available) included about 400,000 of 610,000 New Brunswick tax filers.   

Of those who will qualify for some kind of tax cut, about 150,000 people, or more than two-thirds of those listed as benefiting, reported taxable income below the $82,700 level that would generate a $310 average benefit.   

Included in that group are an estimated 5,000 to 6,000 people with taxable incomes just above $45,000 who will benefit from the changes, but by $9 or less.

Tax data for 2020 suggests the bulk of the savings will flow to higher income earners, including about 3,240 New Brunswick residents who reported incomes above $250,000.   

That group is in line to save an average of more than $2,700 each from the changes, or more, if incomes in that group rise between 2020 and 2023.

On Tuesday, Premier Blaine Higgs suggested cutting tax rates on high income earners should help attract more professionals to New Brunswick, including doctors, but Steeves couldn't cite any data behind that belief when asked about it and instead cited some out of date statistics about how high taxes in New Brunswick used to be.

"Are people paying too much tax in New Brunswick?" Steeves asked reporters rhetorically. 

"Yes, we thought they always have paid too much tax, and you can look at the data for that. Compared to other provinces we were the highest, the highest tax province and even in North America one of the very highest."

That was an apparent reference to 2015 when New Brunswick Liberals under former premier Brian Gallant raised New Brunswick's top income tax rate to the highest in Canada at 25.75 per cent.  It was lowered to 20.3 per cent in 2016 where it has remained since.

Currently, New Brunswick has the lowest tax burden on high-income earners east of Ontario, according to an interprovincial comparison done earlier this year of all ten provinces by Alberta's Treasury and Finance Department.

According to that study a two income couple with two children and a household income of $200,000 per year in New Brunswick would pay $18,457 in provincial income tax, $244 less than in Newfoundland and Labrador, $1,458 less than in P.E.I. and $2,834 less than in Nova Scotia.

Income tax rates on the same couple are $6,836 cheaper in Ontario, but $3,519 in income-based payroll and health premium charges not levied in New Brunswick offset more than half of that difference.

Nevertheless, the belief that taxes in New Brunswick are higher than in all other provinces persists inside the provincial government and was cited again Wednesday by Higgs in defence of the tax cuts in the Legislature.

"When people look here, they do not want to see the highest-taxed jurisdiction in the country," he said.