The Honourable Ross Wiseman, Minister of Finance and President of the Treasury Board, presented the Newfoundland and Labrador budget on April 30, 2015. In the words of the Minister, this year’s budget:
“…is taking a measured approach to dealing with the fiscal realities facing Newfoundland and Labrador. The Provincial Government recognizes that the decline in oil prices has placed a great strain on our revenues and we need to adjust our course to meet this new reality head-on”.
The “Balancing Choices for a Promising Future” budget announces a five-year plan to return the province to a surplus position, including one very significant commodity tax change and a few other initiatives related to sales taxes.
Harmonized Sales Tax (HST) Rate Increase
The budget proposes to increase the HST rate from 13% to 15%, effective January 1, 2016, with the provincial portion of the HST increasing from 8% to 10%. The impact of this rate increase on low-income individuals and families will be mitigated by an increase to the existing HST credit and by making this credit available to more taxpayers. The enhanced HST credit will take effect starting with the October 2016 payment.
Partial Municipal Rebate
Currently, municipalities, local service districts and similar entities in Newfoundland and Labrador do not receive a rebate for the provincial portion of the HST. The budget proposes to provide these entities with a partial rebate for the provincial component of the HST. Commencing January 1, 2016, the rebate will be 25% of the provincial portion of the HST, with an increase to 57.14% scheduled to take effect on January 1, 2017.
Elimination of the Residential Energy Rebate
The budget also proposes the elimination of the Residential Energy Rebate, effective July 1, 2015. This rebate was introduced in 2011 to help residents offset the rising price of home-heating fuel. The budget notes that the effective date of this change has been deferred in order to allow suppliers sufficient time to adjust their billing systems.
Tobacco Tax Rebate – Labrador Border Zones
Based on input from retailers regarding the lower tobacco tax rates in Quebec that are negatively impacting retailers in Labrador West, the province is proposing to reinstate a rebate for a portion of the applicable tobacco tax for retailers in that region, effective May 1, 2015.
Additional information on the 2015 Newfoundland and Labrador budget is available on the province’s web site at: http://www.budget.gov.nl.ca/budget2015/default.htm.