A corporate income tax rate goes low in latest budget
In Budget 2014, the Progressive Conservative government has rolled back the small business corporate income tax rate from four per cent to three per cent.
The change, it was emphasized Thursday, brings Newfoundland and Labrador in line with Nova Scotia for the lowest small business corporate income tax rate in Atlantic Canada, with New Brunswick and Prince Edward Island both sitting at a tax rate of 4.5 per cent.
This province’s tax cut was welcomed by representatives of the business community, including the St. John’s Board of Trade and the Canadian Federation of Independent Business (CFIB) in Newfoundland and Labrador.
Expecting big impact
Vaughn Hammond with the CFIB, who was at the Confederation Building as the budget was read, said it would be wrong for anyone to say the small business tax break would not have much of an effect.
“The government has identified (it will reach) 6,000 businesses. So if you look at the people that are going to be affected by that ... the company within our membership has an average of 20 employees, so you’re kind of looking at 120,000 people that would be affected by this small business tax rate,” he said, putting forward an estimate on the numbers.
“We’re quite pleased with the fact the small business tax rate is going to go down in July to three per cent,” he said. “That’s something we’ve been asking for for quite a while and so we’re pleased to see that.”
He said the savings for business owners will allow for more to go towards worker training, wage increases, investments in equipment and expansion.
Unfunded public-sector pension
Yet, despite his approval for the small business tax break, Hammond steered discussion to the province’s unfunded public-sector pension liability, expected to grow to almost $9 billion of net debt by 2016-17.
“It’s crowding out everything else that we want,” he said.