News Release

FREDERICTON (GNB) – One of the most significant choices laid out in the document Choices to Move New Brunswick Forward is increasing the Harmonized Sales Tax (HST) to 15 per cent from 13 per cent. This move could raise up to $300 million per year.

Depending upon the magnitude of the other choices made under the Strategic Program Review, the government could direct as much as $100 million of new HST revenue towards programs to assist low and middle-income households to offset the impact of an increased HST.

"As part of our review of every line of the government's books we have identified hundreds of millions of dollars of potential savings," said Health Minister Victor Boudreau, who is also minister responsible for the Strategic Program Review. "But New Brunswickers have made it clear that they want us to consider revenue options as well."

The HST is the government's second-largest form of own-source revenue, bringing in nearly $1.2 billion per year. It was established in 1997 at a rate of 15 per cent replacing the combined Goods and Services and New Brunswick Provincial Sales tax rates of more than 18 per cent. The HST was at 15 per cent in New Brunswick from 1997 to 2006. The federal government lowered its HST rate in 2008 resulting in a combined tax rate of 13 per cent. Subsequently, Nova Scotia increased its share by two percentage points restoring the rate to 15 per cent in that province. New Brunswick is now considering doing the same as part of the Strategic Program Review.

"Most economists agree that consumption taxes like the HST are the fairest taxes to raise, especially if complemented by programs to assist lower-income households," said Boudreau. "Moreover, after the provincial government implemented the largest personal income tax increase in our province's history a few years ago, there is frankly not enough room left to increase personal income taxes."

“The Choices document includes a number of expenditure and revenue initiatives but choosing several of six key major initiatives will be necessary in order to get New Brunswick back on a secure fiscal foundation,” said Boudreau.

The six key initiatives are:

• rightsizing senior management in the civil service;
• reducing spending on health care;
• reducing spending on education;
• increasing the Harmonized Sales Tax;
• increasing the Corporate Income Tax; and
• introducing highway tolls.

The government has committed to continue to consult New Brunswickers and then make decisions on Strategic Program Review in time for the 2016 budget to be tabled in the legislative assembly on Feb. 2.

The public is encouraged to find out more about the Strategic Program Review online and the choices outlined in the report entitled Choices to Move New Brunswick Forward.