As the Nova Scotia election begins, the corporate tax fear is real

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Authorities accounts for greater than half of Nova Scotia’s financial system, it has one of many highest gross sales taxes and 6 different provinces have decrease company taxes.

Halifax Chamber of Commerce president Patrick Sullivan considers himself an optimist, however that’s a tough job given these figures.

“Whenever you take a look at all these issues mixed, it’s important to say, ‘Is Nova Scotia a lovely marketplace for new jobs, for companies to develop, for companies to open? The reply might be ‘no.’”

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The province’s election marketing campaign is lower than every week outdated and two events have mentioned they are going to decrease the gross sales tax if elected, however none have talked about the tax on companies.

Sullivan mentioned Nova Scotia can and will decrease its company tax price if it’s severe about attracting and protecting companies.

The company tax price is 14 per cent, two factors greater than in most different provinces.

Sullivan mentioned Nova Scotia enterprise homeowners additionally face a number of the highest industrial taxes, levied by varied ranges of presidency, from lodge taxes to occupancy tax to taxes on signage encroaching on sidewalks.

Then there’s the province’s private earnings tax charges, that are close to the best in Canada.

However Sullivan is concentrated on the company price, which he desires to be consistent with different provinces at 12 per cent.

“I congratulate the companies that open yearly,” he mentioned. “I congratulate the companies that develop in Nova Scotia, however they’re doing it within the face of some fairly sturdy headwinds.”

On Sunday, Premier Tim Houston known as a snap election, with affordability and housing on voters’ minds.

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Houston has already pledged to scale back the HST by one proportion level to 14 per cent, whereas the Liberals have promised to decrease it to 13 per cent.

Sullivan mentioned he welcomes the reduce, however a tax break additionally must be prolonged to the enterprise group.

Nova Scotia is able to accomplish that, he mentioned, because the province’s income has soared on account of a inhabitants increase that’s including residents on the quickest price because the Nineteen Fifties.

The province’s income was over $1 billion greater than budgeted in every of the final two fiscal years. As a substitute of projected deficits, the province ended up with $116-million and $143-million surpluses, respectively. Tax revenues within the 2022-23 fiscal yr elevated to $763 million, $193 million of which got here from company taxes.

Nova Scotia spent greater than $1.3 billion in cash that was not initially budgeted in its final fiscal yr 2023-24.

“There’s lots of spending happening,” Sullivan mentioned. “It will be nice to maybe return a few of that spending to residents or companies quite than (leaving) the federal government to determine the place that considerably elevated income ought to go.”

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To draw business and manufacturing, Nova Scotia must be aggressive with different markets, he mentioned, and having a aggressive tax price is a part of the equation.

“Companies make selections day-after-day based mostly on how a lot cash they’re going to make and the way a lot they’ll return to their shareholders. We wish to make sure that companies are getting the best return,” he mentioned.

“Once they’re getting the best return, that’s to additional put money into enterprise, or that’s to share with their workers or that’s to undertake new applied sciences so we will be extra environment friendly than we’ve got been prior to now.”

However Melvin Cross, an adjunct professor of economics at Dalhousie College in Halifax, isn’t shopping for the argument, which, in brief, is {that a} price reduce can be good for enterprise and what’s good for enterprise is sweet for Nova Scotia.

“The primary assertion is simple to just accept. A decrease company tax price absolutely will profit enterprise,” he mentioned. “The second assertion deserves empirical assist.”

Cross desires to see the impact a reduce would have on company earnings, provincial tax revenues, new companies, new employment and the cost of wages and salaries in Nova Scotia. He’d additionally prefer to see the methodology.

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Sullivan mentioned the proof will be discovered within the six different provinces which have decrease company tax charges.

“Each a type of provinces has a bigger financial system. That appears to be empirical proof of how the company tax price works,” he mentioned. “If a person has a alternative to start out a enterprise, or the place to maneuver a enterprise or the place to develop a enterprise, it might appear to me that these are in all probability areas that may be thought of earlier than Nova Scotia or any Atlantic province.”

Sullivan has additionally heard such tales firsthand.

“I’ve talked to companies which have mentioned, ‘I’m my choices, together with Ontario, Western Canada … Atlantic Canada or Nova Scotia,” he mentioned. “Cash strikes to the place it’s most successfully used, the place enterprise can develop.”

What he hears is that the tax worry is actual.

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