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The government represents more than half Nova ScotiaBritish Columbia’s economy has one of the highest sales taxes and six other provinces have lower sales taxes. corporate taxes.

Halifax Chamber of Commerce president Patrick Sullivan considers himself an optimist, but it’s a tall order given these numbers.

“When you look at all of these things combined, you have to ask yourself, ‘Is Nova Scotia an attractive market for new jobs, for business expansion, for business opening?’ The answer is probably “no”.

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The province’s election campaign is less than a week old and two parties have announced they would cut the sales tax if elected, but neither has mentioned the business tax.

Sullivan said Nova Scotia can and should reduce its corporate tax rate if it is serious about attracting and retaining businesses.

The corporate tax rate is 14 percent, two points higher than in most other provinces.

Sullivan said Nova Scotia business owners also face some of the highest business taxes, levied by various levels of government, ranging from hotel taxes to occupancy tax to sign taxes encroaching on the sidewalks.

Then there are the provincial staff income tax ratewhich are near the highest in Canada.

But Sullivan is focused on the corporate rate, which he wants to bring in line with other provinces, at 12 per cent.

“I applaud the businesses that open every year,” he said. “I applaud the businesses that are growing in Nova Scotia, but they are doing so despite some pretty strong headwinds.

Prime Minister Tim Houston called a snap election on Sunday, with affordability and housing on voters’ minds.

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Houston has already pledged to cut the HST by one percentage point to 14 per cent, while the Liberals have promised to lower it to 13 per cent.

Sullivan said he welcomed the reduction, but said tax relief should also be extended to the business community.

Nova Scotia is in a position to do so, he said, as the province’s revenues have soared due to a population boom that is increasing the number of residents at the fastest rate in years. 1950.

The province’s revenues have exceeded budget estimates by more than $1 billion in each of the last two fiscal years. Instead of expected deficits, the province ended up with surpluses of $116 million and $143 million, respectively. Tax revenues in the 2022-23 financial year increased to $763 million, of which $193 million came from corporate taxes.

Nova Scotia spent more than $1.3 billion in money that wasn’t originally budgeted during its last 2023-24 fiscal year.

“There’s a lot of spending going on,” Sullivan said. “It might be great to return some of that spending to residents or businesses rather than (letting) the government decide where that significantly increased revenue should go.”

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To attract industry and manufacturing, Nova Scotia must be competitive with other markets, he said, and having a competitive tax rate is part of the equation.

“Companies make decisions every day based on how much they will make and how much they can return to their shareholders. We want to ensure that businesses get the best return possible,” he said.

“When they get the best return, it’s by investing more in the business, or sharing with their employees or adopting new technology so we can be more efficient than we have been in the past. »

But Melvin Cross, assistant professor of economics at Dalhousie University in Halifax, there is disbelief in the argument that, in short, a rate reduction is good for business and that what is good for business is good for Nova Scotia.

“The first statement is easy to accept. A reduction in the corporate tax rate will definitely benefit businesses,” he said. “The second claim deserves empirical support.”

Cross wants to see the effect a cut would have on business profits, provincial tax revenues, new businesses, new jobs and the payment of wages and salaries in Nova Scotia. He would also like to see the methodology.

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Sullivan said the proof can be found in the six other provinces that have lower corporate tax rates.

“Each of these provinces has a larger economy. This appears to be empirical evidence of how the corporate tax rate works,” he said. “If a person has the choice of starting a business, knowing where to move or expand a business, it seems to me that those are probably areas that could be considered before Nova Scotia or any Atlantic province.

Sullivan has also heard such stories.

“I’ve spoken to companies who have said, ‘I’m looking at my options, including Ontario, Western Canada… Atlantic Canada or Nova Scotia,'” he said. “Money is moved to where it is used most efficiently, where businesses can grow.”

What he hears is that the tax fear is real.

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