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Finance and Treasury Board Minister Allan MacMaster speaks to reporters before tabling the provincial budget at the Nova Scotia legislature in Halifax, on Feb. 29.Darren Calabrese/The Canadian Press

Nova Scotia has tabled a $16.5-billion budget that indexes provincial income tax rates to inflation – a move the government said Thursday will provide relief from the province’s rising cost of living.

“Cost of living has become top of mind for people as we experience some of the highest increases in inflation in 30 years,” Finance Minister Allan MacMaster said in his budget address, which also promised a third straight year of steep spending increases on health care.

With projected revenues of $15.8-billion, MacMaster is forecasting a deficit of $467.4 million after an accounting adjustment. However, in the past two years, similar claims of high deficits have proven incorrect, with the 2023-24 budget producing a $40.3-million surplus.

The government’s big-ticket cost-of-living measure will see it index personal income tax brackets, the basic personal amount and non-refundable tax credits to inflation beginning Jan. 1, at a projected cost of $160 million a year by 2028.

When tax brackets are raised to reflect inflation, that can result in a taxpayer moving to a lower bracket and paying less. It may also mean that if a person’s income grows, they may remain in the same bracket rather than paying more taxes.

MacMaster told the legislature that this measure was aimed at helping citizens cope with inflation levels of four per cent in 2022 and 7.5 per cent in 2023.

However, when pressed by reporters whether the tax measure announced was truly – as his department’s news release claimed – “the largest tax break in the province’s history,” the minister backed away from the statement.

“I would go back to that language (in the news release) and I would be a bit more humble about it. It is something that will grow over time. I do believe it’s meaningful,” he said.

Figures released by the department indicated that for a person whose income is $29,590 or less in 2025, the tax savings would amount to $69, while a person making $93,000 would pay $118 less. By 2028, the savings for the $29,590 tax bracket would be $231 annually and for the $93,000 tax bracket it would be about $390.

The Opposition Liberals have proposed a much larger tax reduction that would take two percentage points off the harmonized sales tax and reduce taxes in the province by about $500 million a year. Liberal Leader Zach Churchill wondered why the Tories didn’t simply adopt his party’s position.

“If we are going to help middle class, working class people and low income Nova Scotians, we have to ensure that they are not paying the highest sales tax in the country,” he said.

Meanwhile, health spending continues to rise, reaching $7.3 billion. The 14 per cent increase in health spending over the 2023-24 budget includes more funding for the health authorities; cancer and diabetes care; and surgeries.

Other support measures include $84.6 million to address homelessness, $7.8 million for child poverty and $2.4 million to create 500 new rent supplements. The budget has also allocated almost $19 million for a new lunch program for students in public school.

Homelessness and housing shortages have emerged as a challenge to Premier Tim Houston’s government, as tent encampments sprang up around the capital over the past year and housing shortages persist around the province.

Just blocks away from the legislature, the City of Halifax has announced it will be cutting off electricity to an encampment Friday.

NDP Leader Claudia Chender said her party has concerns about the government’s refusal to index income assistance and keep people “trapped in poverty” and also over its lack of action on affordable housing.

“They ignore the systemic causes of poverty … and the ways in which government has created poverty through policy choices,” she said.

Houston bristled when asked why his government had frozen income assistance rates for the third budget in a row.

“That’s absolutely not true, I will not accept that,” the premier told reporters. Houston said that 60 per cent of people who are on income assistance and can’t work are getting $300 a month under a human rights settlement for people living with disabilities – a boost he called “very significant.”

He said the other 40 per cent will also get more money through an adjustment in the amount that is clawed back by the government for those who find work.

The provincial government has overestimated its deficit by wide margins in recent years, and has made a number of spending announcements outside the budget process – drawing criticisms from the auditor general for spending public money without the same legislative oversight that the budget receives.

MacMaster said the problems with overestimating deficits has been the result of the province taking in more revenue than anticipated, in addition to challenges with the forecasting system.

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