Income tax increase will cost some thousands more

More than a third of New Brunswick's 380,000 taxpayers will escape significant tax increases following the Alward government's latest budget,but the rest will pay hundreds, even thousands of dollars more, figures show.

On Tuesday, New Brunswick Finance Minister Blaine Higgs announced a series of increases in provincial income tax rates in the 2013-14 budget, designed to raisemore than$180 million a year in new revenue to help fight the deficit.

But the tax hikes, New Brunswick's largest in 30 years, steer mostly clear of lower income residents and attack the wallets of middle and upper middle income earners instead.

Higgs called the increases "progressive" and background papers released with the budget, along with Canada Revenue Agency data, show that about 145,000 provincial residents who earn $30,000 or less will pay just a fraction of the increases.

For example, single individuals with basic deductions who earn $15,000 or less will pay little or nothing extra, while those earning $30,000 will have to pay about $174 extra a year.

Above $30,000, however, the tax increases jump sharply. For example, someone earning double that amount, $60,000, will be hit with more than four times the tax increase, or $796.

Someone earning double that amount, $120,000, will have to pay nearly four times as much again, or $3,055.

At the top end, New Brunswick's 1,660 richest taxpayers, who in 2009 reported average taxable income of $403,398 will have to pay an average of $13,087 extra per yeareach.

Higgs, who with fellow Progressive Conservatives ran in the 2010 election promising to "hold the line on taxes," was called on repeatedly in the legislature on Wednesday to defend the decision to abandon that commitment.

"Why do you believe that you are justified in breaking such a fundamental promise which the premier made trying to get elected," asked Opposition Leader Victor Boudreau.

"The economy has continued to decline," said Higgs. "We had to resort to creating some revenue sources."

Along with income tax hikes, Higgs also increased corporate income taxesboth of which take effect July 1.

Cigarette taxes were increased as well, which took effect on Tuesday at midnight.

Combined, the three tax increases are expected to bring in more than $200 million a yearthe largest increase since 1983 when former Progressive Conservative premier Richard Hatfield's government increased both income and sales taxes.