Newfoundland budget serves up tax breaks for business

(May 2/08) The government of Newfoundland and Labrador has adopted a number of CRFA’s pre-budget recommendations, introducing substantial tax breaks for businesses and consumers.

CRFA urged the government to eliminate the 15% tax on insurance premiums, increase the payroll tax threshold and reduce the personal income tax rate. The province acted on all three recommendations in its Apr. 29 budget

The tax relief on insurance premiums is retroactive to Jan. 1, 2008 and is expected to save consumers $94 million this year, and $75 million annually after that.  This tax relief is particularly valuable to operators of licensed establishments where insurance premiums are high.  

Also effective Jan. 1, 2008, the payroll tax exemption threshold will increase to $1 million, removing more than 300 employers from the tax rolls and lowering taxes for nearly 600 others.  Raising the payroll tax threshold will put $6.5 million back into the hands of employers and will help to partially offset the province’s recent minimum wage increases, which threatened to force some operators above the previous tax threshold. 

The government also adopted CRFA’s recommendation to reduce the personal income tax rate. Beginning July 1, there will be a one per cent drop in all personal income tax rates.  Leaving more money in the hands of taxpayers tends to boost spending on discretionary purchases such as restaurant meals and snacks.

Newfoundland and Labrador’s $675-million foodservice industry includes nearly 1,200 restaurants, bars and caterers and represents 2.8% of the provincial economy.  There are more than 14,700 people employed by the foodservice industry in Newfoundland and Labrador – nearly 7% of the provincial workforce.