NDP leader Dominic Cardy is continuing to steer his party toward the ideological centre of New Brunswick politics, a political sweet spot that happens to be where many of the province’s voters usually land on election day. The latest example of Mr. Cardy’s centrist thinking is evident in his proposal to eliminate the provincial small business tax if his party forms the next government.
It is good to be normally skeptical of tax cut proposals in an election year, as these pledges are more often made for political reasons than in the best economic interests of the province. There are valid reasons why the NDP proposal should be considered, however, as the revenue lost because of the tax elimination would be minimal – only $20 million a year, in a provincial budget that now costs more than $8 billion annually. And while we’re loathe to see the province’s finances deteriorate over an arbitrary tax cut, we’re inclined to believe that a targeted cut to small business may have some positive economic effects. Simply put, small businesses employ the majority of New Brunswick’s workforce, and removing the administrative and financial costs attached to the small business tax will allow the province’s entrepreneurs to focus more of their time on growing their companies. As a consequence, even more sales and employment could be generated, producing more revenue for the provincial government in the form of greater sales and income tax activity.
Economic history has shown that targeted, stimulative tax cuts can have a net positive effect on government treasury, while at the same time producing broader-based economic growth. At the relatively small cost of $20 million, the NDP small business tax cut seems to fit this model, and we would encourage the other parties to offer their own ideas on how to use the tax system to get New Brunswick working again. While we believe voters do not want to be bought with their own tax dollars, we do expect that parties should have sensible and practical ideas about how to gain better results from the provincial budget – and smart tax policy has an important role to play in this regard.
Besides being compelling from an economic perspective, Cardy’s tax proposal has an interesting political message as well. It is clear that New Brunswick’s historic third party is no longer content to sit on the sidelines, and is just as ready to offer practical ideas for government as either the Liberals or Conservatives. Since voters are better off if there is a much more robust democratic competition at the ballot box, this is a welcome development.