Tax savings fall short of N.B. premier's boasts

[SIZE="3"]The New Brunswick government's highly touted income tax cuts that took effect July 1 are returning less money to people's pockets than advertised, according to calculations from the Canada Revenue Agency.

After a budget that included many unpopular cuts in March, Premier Shawn Graham promised a "pleasant surprise" to residents beginning in July as his government's tax cuts started showing up on pay stubs. Although changes have materialized, they have not been as generous as predicted by the premier.

According to calculations performed by the Canada Revenue Agency, in some cases the tax cuts are [B][COLOR="Red"]25 per [/COLOR][/B]cent less generous than the premier first announced.

Saint John resident Courtney Martin said she noticed her pay jump "a few dollars" and was happy to get it.

But her friend, Heather Arsenault, said for her, the difference wasn't enough to notice.

"I may have gotten a few dollars," Arsenault said, "nothing that's going to make a big change in my habits."

[B]Tax savings not as high as expected[/B]

Amounts people are getting from the tax cuts vary according to their income, but in many cases are not as much as they were told to expect.

Graham used opinion articles in provincial newspapers on July 3 to offer a series of examples of how much residents would begin saving after Canada Day, including "[B][COLOR="red"]$276 [/COLOR][/B]by Christmas" for single individuals making [B][COLOR="red"]$45,000[/COLOR][/B].

However, the Canada Revenue Agency did its own calculations of the tax cuts and figured actual savings for those people will be closer to [B][COLOR="red"]$205[/COLOR][/B], [B][COLOR="red"]25 per cent [/COLOR][/B]less than Graham's pronouncement and instructed employers to adjust cheques accordingly.

Similarly, Graham said a couple earning[B][COLOR="red"] $50,000 [/COLOR][/B]each would "save $662 by Christmas," a figure Ottawa said is actually closer to [B][COLOR="red"]$508[/COLOR][/B].

The Department of Finance acknowledges the July 1 changes are smaller than the amounts quoted by Graham and said his numbers include reductions from an old Progressive Conservative government tax break that takes effect every Jan. 1.

In 2001, the former Bernard Lord government introduced legislation requiring annual tax bracket indexing. The legislation increases tax exemptions every year to account for inflation and did again this year.

But that was separate from Graham's tax cut package and took effect last January, not on July 1.

Tax cuts centrepiece of 2009 budget
Graham's tax cuts were the centrepiece of his 2009 budget that included a series of budget cuts to various departments, a forced two-year wage freeze on public sector employees and a $747-million deficit.

The budget also offered the first instalment in a package of personal and corporate income tax cuts designed to stimulate the economy.

New Brunswick will have two tax brackets once the tax cut plan is fully implemented in 2012. People earning less than $37,893 will be taxed at a rate of nine per cent, while those earning more will be subject to an income tax rate of 12 per cent.

The general corporate tax rate will be cut to 12 per cent from 13 per cent in 2009.

By 2012, New Brunswick will have a corporate tax rate of eight per cent, which is half of neighbouring Nova Scotia's 16 per cent corporate tax rate.[/SIZE]