A modest reduction to the small business corporate income tax rate was among the highlights for Island businesses in the 2018 PEI Budget.
For 2018, the small business tax rate will be reduced by 0.5% to 4%. While there were no details of future reductions, government did commit to reducing the rate further in coming years.
In addition to the small business rate reduction, a new Small Business Investment Grant was announced. Businesses purchasing new equipment or technology up to $25,000 will be eligible for a rebate of 15%.
On the personal income tax side, government announced two increases to the basic personal exemption: $500 in 2018 and an additional $500 in 2019. This will help lower the tax bill for Islanders.
There has been no news yet on any carbon pricing plans.
Even with this tax relief, the 2018-19 budget is balanced with government posting a small surplus of $1.5 million. While a balanced budget is definitely good news, spending is still increasing faster than inflation which is a concern for long-term sustainability. With an aging population, budgets are only going to get tighter and it's time government begin preparing for years of leaner revenue growth and big bills for program spending like health care.