Brunswick Taxes: Why So High?

New Brunswick residents face high taxes, with the province's personal income tax rates being among the highest in North America. In 2023, the average family in New Brunswick earning $112,418 is expected to pay $49,623 in total taxes, or 44.1% of their income. This is due to a combination of factors, including slow income growth compared to the tax bill, with incomes growing by 17% since 2019 while the tax bill has increased by 23%. Additionally, businesses in New Brunswick also face high property taxes, paying about three times as much property tax per $100 of assessment as homeowners. The high tax rates have been a concern for residents, especially during a cost-of-living crisis. While the government has implemented some tax cuts, there are still calls for further fiscal reforms to address the high tax burden on residents and businesses.

New Brunswick's high income tax rates

New Brunswick has some of the highest personal income tax rates in North America. In 2023, the average family in New Brunswick earning $112,418 will pay $49,623 in total taxes, or 44.1% of their income. While the province has maintained a strong fiscal policy through the pandemic by balancing the budget, slow income growth and high tax rates have kept the burden relatively high for New Brunswickers.

In November 2022, Premier Blaine Higgs announced a suite of new tax cuts intended to attract people from other jurisdictions and spur housing construction. The changes will see the income tax rate cut for most brackets, with all tax brackets above the second one seeing a reduction, and the second-highest bracket being eliminated entirely.

For example, income between $44,887 and $89,775 will be taxed at 14% instead of 14.82%, and income between $89,775 and $145,955 will be taxed at 16% instead of 16.52%. The cuts will provide the greatest relief to those making over $145,955 a year, which has been criticised by the Green Party finance critic Kevin Arseneau.

Despite these cuts, New Brunswick's personal income tax rates remain high compared to other provinces and states. In addition, business tax rates are at 14%, which is tied for the third-highest in Canada.

New Brunswick businesses also pay high property taxes compared to other provinces. Under the province's property tax system, businesses are subject to a municipal tax rate of 1.5 times the residential tax rate, plus a provincial tax rate that homeowners are exempt from. This means that non-residential properties pay about three times as much property tax per $100 of assessment as homeowners.

The high cost of doing business in New Brunswick is holding businesses back and preventing new jobs from being created. The situation could get worse if a new tax on machinery and equipment is imposed, which would increase property taxes for businesses that manufacture products in their facilities by between 500% and 1000%.

High property taxes

Property taxes are a significant burden for residents of New Brunswick. The province's property tax system is considered flawed and in need of reform. Under the current system, businesses are subject to a higher municipal tax rate than homeowners and also pay a provincial tax rate that homeowners are exempt from. As a result, non-residential properties in New Brunswick pay approximately three times as much property tax per $100 of assessment as homeowners. This makes running a business in the province more costly and discourages investment and job creation.

The high property taxes in New Brunswick are also impacting residents who own homes. In 2024, most property owners in the province received assessment notices indicating that their property values had increased by 10% or more since the previous year. This has led to concerns about higher taxes, particularly as many local governments have not reduced their tax rates to offset the higher property values. While there are protections in place to limit the increase in assessments for existing homeowners, those who have made major additions or renovations to their properties or recently purchased a home are facing higher tax bills.

Seniors aged 65 and older are eligible for a property tax deferral program if they are struggling to pay their taxes due to high assessments. However, the deferred amount becomes a lien against the property and must be paid when the property is sold or transferred.

The provincial government has acknowledged the need for fiscal reform and has taken some steps to reduce taxes, including cutting income and property taxes and phasing in property tax payments for those building multi-unit housing. However, more comprehensive reforms are needed to address the high property tax burden in New Brunswick, particularly for businesses.

The high property taxes in New Brunswick have generated debate and concerns among residents, with many calling for changes to the tax system to reduce the burden on homeowners and businesses alike.

High business tax rates

New Brunswick's high business tax rates are a significant concern for businesses and have drawn criticism from various quarters. The province's business tax rates are tied for the third-highest in Canada, imposing a burden of 14% on businesses. This high rate discourages investment and hinders the creation of new jobs.

The business tax rate in New Brunswick is significantly higher compared to other provinces. This is particularly evident when examining property taxes, where businesses are subjected to a municipal tax rate 1.5 times higher than the residential rate, plus a provincial tax rate that homeowners are exempt from. As a result, non-residential properties in New Brunswick pay approximately three times more in property taxes per $100 of assessment compared to homeowners. This disparity has significant implications for businesses, making it costlier to operate and creating a disincentive for new businesses to establish themselves in the province.

The situation is further exacerbated by the proposed tax on machinery and equipment, which, if implemented, would increase property taxes for manufacturing businesses by 500% to 1000%. This additional tax burden would make New Brunswick businesses uncompetitive compared to their counterparts in other provinces, potentially stifling economic growth and innovation.

In response to the high business tax rates, the Higgs government has indicated plans for a reduction in personal income taxes across all levels in 2023-24. While this may provide some relief, it does not directly address the high tax rates imposed on businesses. The government's recent tax cuts, intended to attract people to the province and boost housing construction, also do little to alleviate the burden on businesses.

The high business tax rates in New Brunswick have drawn criticism from organizations such as CME, which represents businesses that directly employ 31,000 New Brunswickers. CME acknowledges the need for businesses to pay their fair share of taxes but emphasizes that the current system in New Brunswick goes beyond that, hindering economic growth and job creation.

Slow income growth

New Brunswick's high tax rates and slow income growth have kept the tax burden relatively high for its residents. In 2023, the average family in New Brunswick earning $112,418 is expected to pay $49,623 in total taxes, amounting to 44.1% of their income. This is a significant burden, as it means that residents are working for the government for the first 162 days of the year before they can start working for themselves.

The slow income growth in New Brunswick can be attributed to various factors, including an aging population, trade uncertainty, and labour shortages. Firstly, the province has one of the highest proportions of people in the 55-plus age group in Canada, at 36.8%. This aging population will strain services and hinder economic growth, as stated by Finance Minister Ernie Steeves. Secondly, trade uncertainty and weaker growth from international and domestic trading partners will contribute to slower economic expansion. Weaker growth from trading partners will result in reduced demand for New Brunswick's exports, affecting the province's overall economic performance. Finally, labour shortages are expected to impact the aquaculture, forestry, and energy sectors, hampering their growth.

To address the challenge of slow income growth, the Higgs government has indicated a reduction in personal income taxes across all levels in 2023/24. While this is a step in the right direction, the current year's reductions might not be sufficient to fully address the high-tax situation in the province. New Brunswick's personal income tax rates have been among the highest in North America, and even with the proposed reductions, tax rates remain high compared to other provinces and states.

The slow income growth in New Brunswick has significant implications for its residents. When income growth lags behind the increase in the tax bill, it becomes challenging for residents to keep up with their tax obligations. This can result in a higher proportion of their income going towards taxes, leaving them with less disposable income. It also discourages investment and creates an unfavourable business environment, hindering the creation of new jobs.

To conclude, slow income growth in New Brunswick, coupled with high tax rates, contributes to the high tax burden on its residents. Addressing this issue requires a comprehensive approach that promotes economic growth, attracts investment, and ensures that tax rates are competitive with other provinces and states. By fostering a business-friendly environment and creating new job opportunities, New Brunswick can work towards alleviating the tax burden on its residents and promoting economic prosperity.

High personal income tax

New Brunswick's personal income tax rates have been among the highest in North America. While the Higgs government has indicated there would be a reduction to personal income taxes across all levels in 2023/24, the tax rates on personal income remain high compared to other provinces and states.

In 2023, the average family in New Brunswick earning $112,418 is expected to pay $49,623 in total taxes, or 44.1% of their income. This is an increase of almost $10,000 since 2019, when the tax bill was 17% lower than current levels.

In response to this, the New Brunswick government has implemented a series of tax cuts intended to attract people from other jurisdictions and spur housing construction. These cuts will see the income tax rate reduced for most brackets, with all tax brackets above the second one seeing a reduction, and the second-highest bracket being eliminated entirely.

The rate reductions are as follows:

• Income between $44,887 and $89,775 will go from 14.82% to 14%.
• Income between $89,775 and $145,955 will go from 16.52% to 16%.
• Income between $145,955 and $166,280 will go from 17.84% to 16% (the fourth bracket was eliminated and taxed at the level of the third bracket).
• Any income over $166,280 will now be taxed at 19.5% instead of 20.3%.

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