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HALIFAX - Planning is underway for a "major review" of Nova Scotia's tax system, Finance Minister Michael Baker has confirmed.

Baker said the review, which he hoped would be completed by the fall, will include an examination of business and personal income taxes as well as provincial user fees.

During a recent interview, Baker said the goal is to put in place "the best possible tax system," while helping the province's economy become more competitive.

"What we want to do is to make sure that we give both our citizens and our businesses a competitive environment," he said.

The minister said while the actual scope of the review hadn't been determined, it would be carried out through a combination of Finance Department staff and outside consultants "where necessary."

"The idea would be that there would be some kind of document that Nova Scotians could respond to," he said.

Small business owners in particular have been vocal about the need for tax measures designed to make the economy more competitive.

And prominent figures such as former New Brunswick Premier Frank McKenna have also been championing the need to slash corporate and capital taxes to help the region compete in the global market.

In a recent speech in Halifax, McKenna argued that lower business taxes in particular, would stimulate enough economic activity to make up for any lost revenues to government.

New Brunswick is also in the process of conducting a taxation review, which Finance Minister Victor Boudreau hopes will provide recommendations that can be implemented in next year's provincial budget.

However, the 2008-09 Nova Scotia budget tabled late last month, contained only a smattering of minor tax decreases including tax credits for public transit users and for seniors who participate in recreational activities.

Meanwhile, the bulk of its projected $105 million in savings to taxpayers were to come from gradual decreases to corporate and personal taxes announced in 2006.

Baker warned ahead of time that the stay-the-course budget would reflect growing concerns over a potential downturn in the Canadian economy and hits to the province's exports because of a stronger dollar and shrinking U.S. market.

In light of those concerns, Baker was asked whether it was a bad time to look at revamping the province's tax system.

"I don't know if there's ever a good time to embark on a major review of this kind," said Baker.

But he said the idea was to look at an "overall tax neutral approach" which could see taxes go down gradually over time, while balancing off the need for taxation so that government can provide necessary programs and services.

Meanwhile, he wasn't ready to say whether Nova Scotians should be prepared for more tweaking or a major overhaul of the tax system.

"I guess I'm going to wait for the recommendations," said Baker.