HST, income tax changes highlight Nova Scotia budget
Posted Apr 6, 2010 03:47:47 PM.
This article is more than 5 years old.
Revenue is up, expenditures are down, but the deficit came in at $222.1 million as Nova Scotia’s finance minister delivered his budget Tuesday.
“Despite steep revenue growth from our offshore industry when the economy was booming, lack of fiscal discipline and poor policy choices over the past decade have driven our debt upward,” said Finance Minister Graham Steele during his hour-long address to the legislature. “It now stands at the second highest per capita, among the provinces. This province’s debt is too high.”
The deficit is down substantially from the $592 million estimated in the fall. The difference, Steele says, is mostly attributed to changes in the civil service pension plan and the 2 percentage point increase to the HST.
The HST increase is expected to bring in $215 million in revenue this year. However raising taxes breaks a major NDP campaign promise to not raise taxes.
“Restoring the HST to 15 per cent is necessary as part of the overall approach to bringing the province back to balance,” says Premier Darrell Dexter.
And while the HST will increase for everyone, some items will be completely exempt. Family essentials like diapers, children’s clothing and tampons will no longer be taxed on the provincial portion of the HST.
There are also changes to the income tax structure, with the richest Nova Scotians bearing the brunt of the restructuring. Nova Scotians with income more than $150,000 will be taxed at 21 per cent, which is up from 17 per cent.
Easy way out
The opposition parties say the NDP has taken the easy way out by simply raising taxes.
Liberal leader Stephen McNeil says the tax measures will likely stunt economic recovery.
Meanwhile Interim Progressive Conservative leader Karen Casey says the NDP could’ve looked harder at government departments. Twelve of the 18 departments are showing an increase in their budgets this year.
However, Steele says much of the savings this year was made through the civil service.
“I think the best example is actually the civil servant pension plan,” says Steele. “We’ve found a solution to a difficult problem that is going to produce, this year, savings to the taxpayer of $100 million and between $150 and $200 million each year every year.”
The savings will be achieved mostly through refinancing under much lower interest rates.
Government is also hoping to reduce the civil service by 10 per cent by 2013, relying solely on retirement and not through layoffs.
Other savings will come through wage restrictions and decreases in department spending.
On the spending side, the government plans to spend $9 billion, mostly on health care, education and road and bridge work.
Steele says there aren’t any service or program cuts in the 2010 budget. However, the minister left the door open to future cuts.
“Every program and every service will be examined for relevance, effectiveness and affordability,” said Steele.
