22 May Small business tax? What small business tax?

Stephen McNeil and Rodney MacDonald both promise to cut the Small Business Tax. McNeil would slash it from five percent to one percent immediately. McDonald would cut it from five to 2.5 percent over three years, starting in 2011.

There’s one big problem with these promises. Nova Scotia doesn’t have a Small Business Tax. It does have a corporate income tax, and that tax is progressive. It levies a lower rate on the first $400,000 of taxable income, and it’s this rate the Liberals and the Tories would cut.

The benefits of these cuts wouldn’t  flow exclusively—or even mainly—to small businesses, or even to companies with small profits.

Cutting the first tranche of Corporate Income Tax would benefit every corporation with taxable income. Companies with at least $400,000 in income would receive the greatest benefit ($16,000 in the case of McNeil’s promised cut).

McNeil’s favorite corporation, Nova Scotia Power Inc., would receive the maximum benefit from his proposed change.