Carbon tax chances 'slim,' Boudreau says

Finance Minister Victor Boudreau offered his strongest statement yet that the Liberal government is backing away from implementing a carbon tax.

The New Brunswick government issued a discussion document in the spring that called for deep cuts in personal and corporate income taxes that then would be offset by cutting government spending, increasing the Harmonized Sales Tax by two points and bringing in a carbon tax.

The carbon tax concept was immediately assailed by critics as a cash grab, a theme that was echoed over the summer when a special all-party legislative committee toured the province to ask New Brunswickers about their feelings on the proposed tax reform.

"I would say the likelihood of the carbon tax is pretty slim," Boudreau told CBC Radio on Thursday morning.

Under the most aggressive mix of tax cuts outlined in the discussion document, the Liberals proposed replacing the system of four personal income tax brackets with a single rate of 10 per cent, which would tie the province with Alberta for the lowest rate in Canada. Meanwhile, large businesses could have seen their corporate taxes fall from 13 per cent to as low as five per cent, givingthem the lowest rate in Canada.

The province estimated the income tax cuts would cost $500 million. That would be replaced by $250 million from raising the HST back to 15 per cent, a $100-million carbon tax and $150 million in internal cuts.

Even though the all-party committee's report has not been made public, Boudreau said the Department of Finance is already looking at how significant the tax cuts can be without bringing in alternate revenue sources.

"Obviously I think everyone knows that the carbon tax idea hasn't gone very far and in all likelihood that is going to be off the table," Boudreau said.

"So that is $100 million that we are going to have to look at how can we redistribute this. So at the end of the day when we were talking about having a flat tax of 10 per cent and reducing corporate income tax down to five, there may have to be some adjustments made there to make up for that difference if we take the carbon tax off the table."

Boudreau is expected to announce the new tax rates in his March budget.