PC tax-cut promise pleases business community, disappoints advocates for poor people

An electionpromise by New Brunswick's premier is generating favourable reaction from the businesscommunity, while being criticized by poverty-reduction advocates.

A Progressive Conservative proposal to reduce the harmonizedsales tax by two percentage points could encourage more retail spending, helping out local businesses, said Jim Cormier, Atlantic director of the Retail Council of Canada.

But reducing the province's HST to 13 per cent would do little to help New Brunswick's poorest residents afford the essentials many of which already aren't subject to the sales tax, said Peter Jongeneelen, co-chair of ACORN New Brunswick.

"They're not going out and buying new furniture or clothing," Jongeneelen said.

"You know, even if they're buying clothing, it's second-hand. So really, the tax savings is just not beneficial to those who need it the most."

On Thursday, Premier Blaine Higgs, speaking as leader of the Progressive Conservatives, announced his party would reduce the HSTif voted back into power in an election to take place by Oct. 21.

Higgs promised, if elected, to reduce the tax by a percentage point as part of the 2025 budget, and by another percentage point in 2026.

Once fully implemented, the tax would cost the province $450 million in annual revenue, while saving the average family about $1,000 a year. Higgs said.

Tax cut good for business, says retail council

Cormier with the retail council said lower taxes are always good for business, particularly now, when inflationary pressures havepushed prices higher.

"As theretail sector,we rely obviously on customers coming in and wanting to spend money in our stores, so if they are paying ... a little bit less in the taxes for those retail goods that they purchase, then hopefully that will encourage them to spend more at the retail locations in their neighbourhoods," Cormier said.

The harmonized sales tax isa federal-provincial tax created in the late 1990s. It comprises a five per cent federal portionand a 10 per cent provincial portion.

The tax applies to all goods and services sold in the province, with some exceptions, includingbasic groceries such as milk, bread and vegetables, feminine hygiene products, and prescription drugs.

Everyone benefits, says federation

Also praising the PCpledge was the Canadian Taxpayers Federation, which described it as a tax cut that would benefit everyone.

"I think really the number one thing to say is that this is a tax cut that will impact every New Brunswicker,"said Jay Goldberg, interim Atlantic director for the federation, a non-profit organization that advocates lower taxes and greater public accountability.

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Jay Goldberg says this tax reduction could translate into $1,000 a year in savings for the average New Brunswick family.

"Whether you're a senior on fixed income, whether you're a teenager trying to stretch your allowance or anyone in between, this is going to be savings for everyone."

Goldberg noted the provincial tax rate had been eight per cent until it was raised to the current rate of 10 per cent by former government of Liberal Brian Gallant in 2016.

With the Higgs government's effort to reduce the provincial debt during two mandates,the province is in the right shape to offer the tax cut, he said.

"So this is really undoing a tax hike that the last Liberal government implemented," he said.

Working class, people with disabilities left out

While the HST reduction brings down spending costs for everyone, it does so disproportionately, said Jongeneelen, with ACORN.

Higgstouted how significant savings are to be had for families looking to buy a new vehicle, renovate their homes or buy new appliances.

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New Brunswick ACORN co-chair Peter Jongeneelen says the promise of a two per cent reduction in HST doesnt add up for those living on modest incomes.

But Jongeneelen said many of New Brunswick's low and moderate-income residents don't earn the income needed to make such purchases, with most of their moneygoing to essentials like rent, food and electricity.

"Two per centoff the taxes really is helping the people who are in the highest tier of society, big corporations, Crown corporations, things like this," Jongeneelen said.

"You know, it does nothing for the people who are, you know, the low, moderate or even medium income that are struggling the most."

Another group of New Brunswickerswho will see little of the tax cut's benefits includes people with disabilities, said Shelley Petit, chair of the New Brunswick Coalition of Persons with Disabilities.

She said the most someone on disability assistance gets from the province is $918 a month, or barely enough money for someone to live on.

Rather than reduce the HST, she said she'd like to see improvements bringing the disability benefit up to at least $1,500 per month.

"I think [the tax cut] is something to help out some of the more well-to-do in this province, who really, their biggest concern is, 'Can I take my third vacation this year?'" Petitsaid.