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We’re still in the infancy of this new minority government, and already we have our first broken election promise.
Whether they voted on April 23 for Dennis King or not, small business owners must have been thrilled at the promise that the small business tax rate was going to take a drastic drop from 3.5 per cent all the way down to one per cent by January.
Well, not so fast. King has revised that promise.
As he told CBC P.E.I. recently, the new plan is to phase in the tax break over the next couple of years. In this year’s budget, you could see a half-point reduction in the rate.
In the election, the Greens campaigned to reduce the tax rate by 0.5 per cent.
While in power, the Liberals had a multi-year commitment to reduce the small business tax rate, and did so – from 4.5 per cent, to four per cent and then to 3.5 per cent, where it sits now. They campaigned on a reduction to 2.5 per cent this time around.
So, what happened to the drastic drop to one per cent? Well, a minority government and a platform of collaboration happened.
In 2018, the Greater Charlottetown Area Chamber of Commerce called for a reduction in the tax rate to two per cent – surpassing New Brunswick’s 2.5 per cent rate and giving P.E.I. businesses the lowest rate in Atlantic Canada.
It looks like P.E.I. small businesses will have to wait a while for that to happen.
Cutting business taxes is an obvious way to grow the economy. But small business owners are already feeling the pinch of downtown rents in the range of $3,000 to $4,000 a month as well as minimum wage increases and the same high costs of living we all face.
Of course, no one knew for sure during the election that we were going to end up with a PC minority government.
But a promise is a promise. And we can suspect that many of the Island business owners and their families who voted for King and the Progressive Conservatives had that tax rate slash in mind.
We can cut King some slack since we are in uncharted waters with a minority government.
If he had a majority, we can take him at his word that the tax rate would have been cut to one per cent by January.
Given the impact that drastic of a cut would have had on tax revenue for government programs and services, that cut may have been too much and too soon.
Even so, it raises the question of what we can believe in an election campaign, especially if the race is close.
ultimately, when collaboration leads to a broken campaign promise, we’re in the dark about how policy decisions are made. King was given the keys to govern the province, but this makes us wonder who is steering the ship.