Taxes in NB

So I'm here in NB, trying to soak up everything I can about our province and the challenges it faces to becoming more self-sufficient. I came across an article in the Telegraph Journal that I want to bring up for discussion. Tax reform. My background, educational and experiential, does not place me in a position to comment on this with much authority. What my background has prepared me to do, though, is be able to ask questions. And I have a few about some tax reform proposals made by a committee studying changes to NB's tax structure. This committee recommended the following adjustments:
1. increase HST rate
2. reduce provincial corporate tax rate
3. implement a flat income tax rate
4. no carbon tax
Let's take a look at the justifications for these suggestions. Number 2, for instance. Provincial corporate income tax is the tax levied by the province on profits made by companies. Ottawa has challenged provinces to reduce their provincial corporate tax rate to 10% - the same as Alberta and the lowest in the country. The view is that we would be able to attract more industry if our tax was lower. After some digging, I discovered that NB already has the lowest provincial corporate tax rate in Atlantic Canada (NS & PEI: 16%, NfLd: 14%). I started wondering about the pros and cons of matching Alberta's tax rate. Are the two provinces regularly vying to attract the same industries? Should we be using Alberta as a benchmark? What about understanding who our true competitors are? If we look at Atlantic Canada, then we've already met the challenge. Maybe lower corporate tax rates are not the only factors we need to consider when understanding our competitive advantage. How about labour force? Other forms of industry incentives?
On to Number 3 - the flat income tax rate of 10%. This means that everyone, regardless of their income, would pay 10% in income tax. There would be provisions (such as rebates for people who already pay less than 10% income tax) that would attempt to protect low income earners (if you want to read about for/against arguments of flat tax, check out Wikipedia). Since the province would be collecting less money in income tax, it needs to find that money somewhere else. Thus, Number 1 – increased HST. Although the exact increase wasn’t mentioned, Number 4 – no carbon tax – means that the boost to HST might have to be greater. The committee stated that the carbon tax would negatively affect NB’s competitive advantage due to our large reliance on oil for electricity. Hmmm…to me this means that we should probably work toward reducing our dependence on fossil fuels instead of removing incentives.
These are just some thoughts I wanted to share and hopefully start some discussion. Let me know what you think.