HALIFAX – Nova Scotia’s harmonized sales tax will be trimmed by one percentage point starting April 1, Premier Tim Houston announced Wednesday amid increasing speculation about a snap election call in the coming days.
The premier said the cut to the provincial portion of the tax would reduce it to 14 per cent from 15 per cent, adding that his government is making the move because people need more help with the cost of living.
“This is the first time in 14 years that a provincial government in Nova Scotia has changed the HST, only this time it’s going down,” said Houston. In 2010, the NDP government raised the sales tax to 15 per cent.
The one percentage point reduction will cost the province about $260.8 million in lost revenue next fiscal year, the provincial Finance Department projects. It says the HST brings in $2.7 billion or 17.1 per cent of provincial revenues, second only to personal income taxes.
Houston’s announcement follows last month’s fiscal update for the 2024-25 budget, when Finance Minister Allan MacMaster warned that the deficit forecast last spring had increased by $187 million to $654 million, due to higher department spending and a slowing of tax revenue.
However, the Progressive Conservative government has consistently overestimated its deficit by wide margins in recent years and has continued to spend large amounts outside of the spring budget process.
When asked whether his government was taking a contradictory stance in advancing a tax cut at this time, Houston said Wednesday that he sees enough signs of progress in the provincial economy to give people a break.
“We are at a point in time where our taxes are holding us back, and if we can address those then we can unleash more potential,” he said.
Liberal Leader Zach Churchill noted that his party has already proposed a two percentage point cut to the HST and believes the government has fallen short in not doing the same.
“This (cut) quite frankly doesn’t go far enough,” said Churchill. “The fact that they’ve been saying for the last year that they couldn’t do this … and on the eve of what seems to be an election they are doing this, I think, is a pretty cynical play and all about politics.”
Under Nova Scotia’s election law the province has a fixed election date of July 15, 2025; however, Houston has said that he doesn’t feel the need to adhere to that date. Churchill noted the law was the first one passed by the Tory government after it was elected in 2021 and Houston had touted the need for election certainty in the past.
“We have to highlight that he (Houston) is willing to break that promise,” he said.
Meanwhile, NDP Leader Claudia Chender likened Wednesday’s announcement to an election stump speech. While the tax cut will likely be welcomed by the public, she said, it does not address the key problems facing Nova Scotians.
“They want to be able to afford groceries, they want to be able to afford housing and they want to see a good future for their kids,” Chender said. “They want a government that doesn’t pull out an affordability measure in the midnight hours before a potential election.”
In order to implement the change, the province has to give six months notice to the Canada Revenue Agency, which has already been done, officials said. The province will also need to pass legislation in order to enact the tax cut.
Nova Scotia’s HST combines the provincial value-added tax with the federal goods and services tax. Other provinces that have the HST include New Brunswick, Prince Edward Island, Newfoundland and Labrador and Ontario.
This report by The Canadian Press was first published Oct. 23, 2024.
