New Brunswick’s 2016-17 budget was tabled by Finance Minister Roger Melanson on February 2, 2016. The focus of this budget appeared to be driven from the results of the Choices to Move New Brunswick Forward report, which identified six key choices for the government in order to eventually return the province to a balanced budget, including changes to the HST and other taxes, while continuing to meet the needs of New Brunswickers. Notwithstanding the measures announced, the deficit for 2016-17 is estimated to be $347 million.
Included in this year’s budget are several significant tax changes which have been summarized below.
Sales Tax Measures
- Increase of 2% to the provincial portion of the HST rate, resulting in a 15% HST, effective July 1, 2016. The new rate will be similar to the current sales tax rates in the neighbouring provinces of Nova Scotia (15% HST) and Quebec (14.975%, combined 5% GST and 9.975% QST).
- To alleviate the impact of the HST increase, low to middle income households will receive a refundable HST credit up to $300 for individuals, $300 for a spouse or equivalent, and $100 per child under the age of 19 (single parent families will receive $300 for the first child). This complementary income tax credit will be reduced by 2 cents for every dollar earned above $35,000, thereby eliminating any HST credit for individuals with incomes of $50,000 or more and families of two parents and two children with incomes of at least $75,000.
- Tobacco tax is set to increase in two phases: a 3.26 cent per unit increase to 22.26 cents, effective February 3, 2016; and another 3.26 cent per unit increase to come into effect on February 1, 2017.
Other Tax Measures
- Increase in the general corporate income tax rate from 12% to 14%, in line with the tax rates in effect in Newfoundland and Labrador. Note that this increase will not affect companies that only pay the small business income tax rate.
- Effective April 1, 2016, the real property transfer tax rate will increase by 0.5% to 1%.
- The highest marginal personal income tax rate of 25.75% has been eliminated, retroactive to January 1, 2016, and the rate applicable to taxable income over $150,000 will be reduced from 21% to 20.3%. This change was triggered by the introduction of a new top income tax rate by the federal government at the beginning of 2016.
Additional information on the New Brunswick 2016-17 budget is available on the province’s web site at: