N.S. NDP propose 10 per cent manufacturing tax credit to boost business

Nova Scotia's NDP will introduce a 10 per cent manufacturing and processing tax credit if they come to power, party leader Darrell Dexter told a business audience Thursday.

Dexter used a lunchtime address to the Halifax Chamber of Commerce to pitch a refundable credit as the most effective way of supporting private-sector businesses during the economic downturn.

"The credit would be 75 per cent refundable because a downturn is often the best time to invest," he told the audience.

Dexter said his proposal would cost the province up to $25 million in the first year of the program with as much as $18 million paid in rebates.

"That provincial investment would trigger the creation of more than 2,000 jobs from construction, purchases of equipment and machinery and the increased operations that result, according to the province's own analysis of a manufacturing tax credit," he said.

The idea was presented as the first plank of the party's platform ahead of what's expected to be an election year in Nova Scotia.

Dexter was asked later by reporters how he would pay for the proposed program, given a shrinking provincial surplus and the fact the Conservative minority has opened the door to running a deficit in 2009-10 after tabling seven consecutive balanced budgets.

"I would pay for it out of the available revenues to the province," Dexter said.

When pressed, he refused to accept that the choice could boil down to either the tax break or staying in the black. Dexter said there's no question that any budget would have to be balanced.

"We have within our budget, money for economic development. We have money for restructuring. We have money for capital investment. This money would come from those areas and are an important part of any stimulus package that a government would bring forward," he said.

The idea isn't new, having been tried by the Conservative government of former premier John Hamm. Businesses were offered a 30 per cent non-refundable tax credit for investments in processing plants and equipment.

But Jamie Muir, a Conservative member and former cabinet minister, said the program was cut in 2002 as part of the ongoing fight to balance the books.

"Anytime you can reduce taxes it's a good thing," he said. "But the decision that's going to have to be made is if you reduce that amount of revenue, what's the tradeoff?"

Dexter's suggestion got a qualified endorsement from Jean-Paul Deveau, president of Dartmouth, N.S. -based Acadian Seaplants Ltd.

Deveau said although the tax credit would clearly help his company, it wouldn't make a difference in whether or not it makes further investments.

He said the tax credit would have to be as high as the former Tory program to spur significant investment by companies.

"That kind of stimulus that would be provided to manufacturers would make a difference and would make a difference in terms of decisions that manufacturers would make," said Deveau.

In his speech, Dexter also promised to do more to make Nova Scotia a "learning province" by involving business and post-secondary institutions in efforts to ensure students get basic skills.

He said that would include a specific role in curriculum review and development.

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