There is a debate going on in New Brunswick about property taxes. It’s important that this debate be based on accurate facts. CME represents businesses that directly employ 31,000 New Brunswickers. Here are the facts about who pays property taxes in New Brunswick.
Business Pays 300 Percent More Property Tax Than Homeowners
Under New Brunswick’s property tax system, businesses are subject to a municipal tax rate equal to 1.5 times the residential tax rate plus a provincial tax rate (which homeowners residing in their homes are exempt from). Add it up, and it works out that non-residential properties pay about 3 times as much property tax per $100 dollars of assessment as homeowners.
Of course, tax rates must be put in context. It’s a fair question to ask how does business property tax in New Brunswick relate to other provinces? The answer is clear – today, non-residential property taxes in New Brunswick are already amongst the highest in Canada.
That means it costs more to run a business in New Brunswick. That’s holding businesses back and preventing new jobs from being created. And that is before the impact of a new tax on machinery and equipment being proposed.
Taxing Machinery and Equipment Will Discourage Investment
So, New Brunswick businesses already pay high property taxes compared to other provinces. But that tax burden will get exponentially higher if a new tax is imposed on machinery and equipment.
A new tax on machinery and equipment will increase property taxes for our members that manufacture products in their facilities by between 500 percent and 1000 percent. That will mean their property tax bill will be exponentially higher than what their competitors pay in other provinces.
Alberta is the only province that taxes machinery and equipment broadly, largely to capture property tax from oil and gas extraction, and even then, the tax is not applied in the main cities of Calgary and Edmonton.
A new tax on machinery and equipment in New Brunswick will increase property taxes for some facilities by over 500 percent. Property taxes for business in New Brunswick will be exponentially higher than other provinces across the board.
Any revenues generated by this tax will be more than outweighed by the growth it stops and the investment it drives away.
Fix the system
We agree that New Brunswick’s property tax system is badly flawed. But piling yet another tax on business isn’t the right solution.
We need to step back and look at the system in its totality. At CME, we believe that businesses should pay their fair share of taxes. In New Brunswick, they already do, and then some.