In January, small business owners can make more profit while paying the government less in corporate tax.
Last year, the Yukon’s small-business corporate tax rate dropped to four per cent a year, from six per cent.
Starting next year, the amount of income business owners can make and still qualify for that low rate will rise to $400,000 from $300,000, thanks to a fast-tracked change from the Yukon Party government.
“This is a significant measure for small business; it’s providing significant resources by putting it back into the businessperson’s hand,” said Premier Dennis Fentie following question period on Wednesday.
“This allows us to stimulate further the private-sector economy in the Yukon.”
Combined, the small business tax changes and recent adjustments to personal income tax will help rouse private business in the Yukon, said Fentie.
Both the Liberals and the New Democrats supported the increases for small business deduction limits during debate on Wednesday.
But both also voiced concern with the speed that the changes have been made, compared with the malaise that seems to have set in with the Yukon Party government on other important social and legislative reforms.
“We are disappointed that this government, with some $85 million in available funds and the financial wherewithal to make changes like this, did not also come forward with other changes that would help people on social assistance,” said Liberal leader Arthur Mitchell on Wednesday.
Acting NDP leader Steve Cardiff responded to the cuts favourably, but added the NDP is still waiting for action “on the social side of the ledger,” on such issues as social assistance, food allowance, social housing and a shelter for homeless youth.
Spending increases in several departments reflect the Yukon Party’s dedication to social programs, said Fentie.
The recent supplementary budget shows “dramatic” spending increases in health, social services, continuing care, seniors, home care and diabetes, he said.
“If that is the opposition’s measurement, it looks like the government’s side is well out in front,” said Fentie.
The Yukon’s corporate tax scheme has been changing since 2004, said Finance director Bill Curtis.
In January 2004, the tax deduction limit stood at $250,000; in 2005 it was increased to $275,000, then $300,000 in 2006.
Since being rolled out, the tax changes have reduced government tax revenues by about $1.1 million, said Curtis.
“A company that made $400,000 last year would save $11,000 in taxes this coming year,” he said.
“And, that’s coupled with federal increases, so they would also get another saving of about $9,000.”