Nova Scotia is offering small tax cuts and trimming its deficit in its spring budget as the province, buoyed by a $25-billion federal shipbuilding contract, looks ahead to brighter economic times.
The province’s NDP government tabled a $9.5-billion budget on Tuesday with a projected deficit of $211.2-million for 2012-13. That’s down from the $260.8-million deficit it reported last month, mainly due to department spending reductions as well as increases in federal equalization payments.
The rosier economic picture and modest tax relief have prompted the province’s opposition parties to accuse the government of positioning itself to call a snap election this year. The government’s announcement on Monday night that it will introduce legislation this spring to drop the harmonized sales tax by two percentage points by 2015 only intensified that speculation.
But Premier Darrell Dexter dismissed that on Tuesday.
“We won’t even be reaching the three-year mark of our government until June, and so we are in no rush to see an election in this year,” Mr. Dexter said. “People elected us for a full term, and we want to see that through.”
Finance Minister Graham Steele said the province’s fiscal position will be strong enough to fulfill the government’s promise to balance the books next year.
“In a word, this budget is steady,” Mr. Steele said in his budget speech. “Next year, this province will have a real, sustainable surplus based on reliable revenues and reasonable expenditures.”
As promised, the budget contained personal income tax cuts that the government said would save 78,000 Nova Scotians about $7.5-million.
The savings would come from increases to three non-refundable personal income tax credits, including for single parents with children under 18, couples and anyone with a disability.
Finance officials said the savings would range from as little as pennies for some to just over $200 for people with disabilities.
Also, as announced on Monday, the government said it will reduce its small business tax rate by half a percentage point, to 3.5 per cent from four per cent, resulting in savings of $10-million annually.
It’s the third straight year the tax has been cut by half a percentage point, a move the government says will save each business up to $6,000 per year beginning Jan. 1.
But Opposition Liberal Leader Stephen McNeil said the budget didn’t do enough to help people cope with the increased cost of living.
“There’s nothing in this budget for Nova Scotians who are dealing with the pressures of daily living, whether it’s the price of power or the price of gas,” Mr. McNeil said.
Progressive Conservative Leader Jamie Baillie said the government could have eliminated the deficit this year, accusing it of playing a “cruel shell game.”
“Just by holding the line on spending, we could have a surplus today,” he said.
Kevin Lacey, the Atlantic director for the Canadian Taxpayers Federation, said the tax relief doesn’t go far enough.
“We are very disappointed the government has promoted lower taxes as part of its agenda yet thousands of Nova Scotians will see no reduction at all and we will remain the highest taxed province when you look at income, provincial, federal and property taxes,” Mr. Lacey said.
Jim Bickerton, a political science professor at St. Francis Xavier University, said he sees parallels between Mr. Dexter's promise to reduce the HST and Prime Minister Stephen Harper’s cut in the GST.
“I think there’s a general consensus among economists that it's much better to reduce income tax than to reduce sales tax, especially the HST,” Mr. Bickerton said. “However, it's been shown by the Harper government that it can be a very successful political move.”
As part of its cost-cutting measures, the government said it will proceed with a previously announced 1.3 per cent reduction in overall funding to school boards. The $13.4-million cut comes as the province braces for an expected enrolment decline of 1.7 per cent this year.
Overall spending for heath care is up 2.5 per cent to $3.9-billion. Finance officials said that includes a $15-million increase for the province's nine district health authorities.
The government said its overall net debt, which stands at $13.3-billion, is projected to hit $13.7-billion as of March 31, 2013 – or $14,547 for every man, woman and child in the province.
The Canadian Press