The subtext, of course, to the overwhelmingly positive response to the NB budget is what to do if you are a conservative. The rightest of the right wing think tanks, AIMS, was gushing like a love struck teenager in the Globe & Mail about the budget. Jack Mintz, the free marketeer crusader of the new West, was equally giddy proclaiming New Brunswick the next ‘Switzerland’. The national standard of the Right, the National Post, was equally thrilled about New Brunswick’s tax cuts and opined that it hoped Ontario and Alberta were watching.
So what to do if you are a PC in New Brunswick? I guess there are three options: 1) agree with the right wing punditocracy (Mintz and Cirtwell, by they way, were key influences on the plan so it would be a bit strange for them not to be wholeheartedly supportive); 2) say it doesn’t go Right enough (righter than AIMS?) and 3) devolve into a kind of Jeannot Volpe-esque/Pat Buchanan populism that rails against the evils of big business and global trade. My guess is that the pull will be towards door #3.
I actually support having competitive tax rates – so don’t think I am against this tax plan. I just find it fascinating that many of the ‘best minds’ and leading pundits are so sure that business investment will just roll in because of a few million dollars in tax cuts. If it were that easy, everyone would have done it.
We already have an example in New Brunswick. Bernard Lord cut the small business tax rate to the lowest in Canada and every single think tank (including AIMS) was equally giddy. Problem is that the Fraser Institute did a study of small business creation during that time frame and ranked NB 58th out of 60 US states and Canadian provinces.
I worry that AIMS and Mintz and the National Post are using New Brunswick as the patsy to stimulate a national agenda of pervasive tax cuts. Everyone who even takes a modest look at the data will see that New Brunswick generates very little corporate tax compared to Ontario (as a percentage of the budget). Cutting the rate to 8% in New Brunswick will be hardly noticed (at full implementation it cuts out something like $37 million out of the budget with a deficit of $700 million). The numbers just don’t work.
What New Brunswick really needs is an economic development strategy that follows best practice models for stimulating significant new business investment. Those elements include: targeted tax incentive programs for direct business investment and job creation; investing in capacity and infrastructure to support key industry sectors (low energy costs, high quality workforce, excellent R&D infrastructure, etc.) and then promoting the heck out of the province in key global sectors.
Cutting a tax and then waiting for the Cirtwell/Mintz/National Post business investment to come pouring in seems like a risky proposal to me. I wonder if Mintz will be recommending New Brunswick to his business clients? Maybe.