Small business tax cut will create jobs, Brian Gallant says

Premier Brian Gallant used his first full day in government to announce that small business taxes will be cut on Jan. 1, a move that he argues will lead to new jobs in the province.

Gallant and Finance Minister Roger Melanson announced the small business tax rate will fall to four per cent, from 4.5 per cent, on Jan. 1. 

"I am proud to honour our commitment to lower this tax rate to reduce their costs and make them more competitive,” he said in a statement.

“This is one of many initiatives our government will undertake to create the conditions for more jobs."

Any business that has taxable income less than $500,000 pays the small business rate.

The Liberals promised to cut the small business corporate tax rate to 2.5 per cent by 2018. That would give the province the lowest small business income tax rate east of Manitoba.

Manitoba’s government eliminated small business taxes in 2010.

Gallant has underscored his government’s commitment to job creation and getting the province’s fiscal house in order since the election.

Even though the tax change will not take effect for about three months, the move reinforces those twin priorities.

The finance minister said the tax cut will entice businesses to reinvest in their companies and hire more people.

"Competitive taxes for small businesses help our hard working entrepreneurs get ahead and create jobs," Melanson said in a statement. 

'Very positive message'

The Canadian Federation of Independent Business, which represents small business owners in the province, applauded the tax cut announcement on Wednesday.

Denis Robichaud, the CFIB director of provincial Affairs for New Brunswick, said Gallant’s announcement sends a strong signal to his members that the premier understands their concerns.

“I think it is very positive that this is the first official announcement of the new Gallant government,” Robichaud said.

“I think the fact that they are taking action on this — which is one of the main concerns of small businesses, which is taxes — I see this as a very positive message.”

Robichaud said the extra money will help small businesses reinvest in their companies, extend hours to existing employees or perhaps add new staff.

The CFIB director said this initial tax cut will help, but his members look forward to 2018 when the rate is reduced to 2.5 per cent.

“We think that every little bit helps in putting more money in those businesses. The main goal is for them to have more revenues to reinvest,” he said.

Each month, the CFIB surveys its members and creates a barometer to show how confident small business owners are about the economy and their future.

In September, the barometer was down, Robichaud said, which could be chalked up to uncertainty and the election, or other factors. He said it will be interesting to watch how the business community responds to Gallant’s first days in government.