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During the 2010 election, New Brunswick Premier David Alward promised to cut the five per cent small business tax rate in half by the end of his four-year term. The tax was reduced to 4.5 per cent in the 2011-2012 budget, but it has not moved since

STRINGER/REUTERS

New Brunswick Premier David Alward is backing away from a campaign promise to provide tax relief to small businesses, saying it will be difficult to follow through on that commitment because of fiscal pressures.

During the 2010 election, Alward promised in the Progressive Conservative platform to cut the five per cent small business tax rate in half by the end of his four-year term. The tax was reduced to 4.5 per cent in the 2011-2012 budget, but it has not moved since.

Alward said it will be difficult to reduce the tax rate further.

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"We are working within a very significant fiscal constraint right now," Alward said Tuesday.

"The way things are fiscally right now, we are going more prudently."

The province ran a $508-million deficit last year and the latest figures for 2013-2014 forecast a deficit of almost $500-million. The premier and finance minister have blamed declining revenues for the poor financial state.

Alward said the government is looking at other options to help small businesses, such as investor tax credits.

The New Brunswick government raised the corporate tax rate for big businesses to 12 per cent from 10 per cent on July 1.

"We didn't increase small business taxes like we did corporate taxes because of the competitive opportunity for the small business community," Alward said.

Richard Dunn, a senior policy analyst with the Canadian Federation of Independent Business, said he's not surprised by the premier's position on the small business tax rate, especially when there was no change in the last two budgets.

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But he said the government needs to find a way to fulfil the promise.

"What we're hoping for is to encourage entrepreneurship in this province to help stimulate the economy and grow job opportunities," Dunn said.

He said small businesses need help to invest and hire more people.

Liberal Opposition Leader Brian Gallant said broken promises from the Alward government are hurting the economy because businesses can't plan for the future.

"It hurts our companies, it hurts our industries and it hurts New Brunswickers who have made important decisions based on what they thought were coming," Gallant said.

"I think it is a clear indication that this government doesn't have a plan for economic development and doesn't have a plan to create jobs."

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Alward said no decision on the tax rate for small businesses will be made until the spring budget.

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