Nova Scotians will be dipping into their pockets for an extra $55-million, including what the opposition is calling a ”iddie tax,”as the Conservative Government wrestles with increasing health-care costs.
After introducing his $3.25- billion budget in the Legislature yesterday, Finance Minister Greg Kerr told reporters that, since federal- provincial sharing of health costs began, the shortfall between actual costs and related revenue has reached $1-billion.
To help make up the difference, Nova Scotians will now be paying eight cents more for a pack of 20 cigarets as well as losing tax exemptions in a number of areas.
Mr. Kerr said the cigaret tax is the only new levy. But there will now be a 10 per cent sales tax on the labor component of the cost of repairs and maintainence for what the minister called ”angible personal property.” Mr. Kerr said that, while the full definition of tangible personal property has yet to be worked out, the tax will cover repairs to such items as automobiles and appliances, but not homes.
Officials from Mr. Kerr’s department predict the Government will take in an additional $30-million by dropping the exemption on labor involved in such repairs. There is already a 10 per cent tax on parts involved in such maintenance work.
The Government also has lowered the threshold under which purchases are exempt from sales tax to 26 cents from 51 cents, prompting Liberal financial critic William Gillis to quip, ”hey’re now hitting the kids. Nova Scotia becomes the first jurisdiction to have a kiddie tax.” There will be a 10 per cent sales tax on articles of clothing costing more than $300 and footwear in excess of $150. Previously, there was no sales tax on these items. Nova Scotians pay no direct health-care premiums; the province pays for its share of medicare with sales tax revenue.
The Conservatives did little to cut the provincial current account deficit, which amounted to $192.3-million last year. The Government’s operating deficit for the current fiscal year is forecast to be $7.7- million less than last year’s.
Premier John Buchanan’s Government is saddled with a $3-billion total debt this year, up from $2.68-billion last year. Mr. Kerr noted that Nova Scotia has suffered a net loss of $32-million in equalization payments from the federal Government.
There was no increase in the price of electricity to consumers, but the 9.5 per cent power rate subsidy to consumers, which cost the Government $37-million this year, will be dropped on April 1, 1986.
There was no mention of job creation in the budget. Nova Scotia has the third worst unemployment rate in the country, with 65,000 people – 14.7 per cent of the available work force – looking for work.
New Democratic Party Leader Alexa McDonough called the budget ”he ultimate in political cynicism,”charging that, by its failure to stimulate the economy and create jobs, the Government had concocted ” recipe for disaster.” Mrs. McDonough decried the lack of job creation measures and charged that in the very areas where job creation could have been stimulated – the departments of development and housing – there were actually cuts. ”t’s worse than a do-nothing budget,” she said. “There’s not one trace of acknowledgment that this province has any economic problems, least of all unemployment.” Dr. Gillis, the Liberal critic, ridiculed the Government for ”ailing the kids”by lowering the sales tax threshold and said that taxing repairs for appliances and cars would hurt low- income people the most.
He also struck out at the Government for breaking Mr. Buchanan’s promise during last fall’s election campaign that there would be no new taxes.
Dr. Gillis said the Government should have examined the possibility of raising corporate income tax instead of adding to the consumers’ tax burden. Neither corporate nor personal income tax was increased.
Mr. Kerr told reporters that Nova Scotia either has to cut services or expand the revenue base to protect the existing level of services. The minister said he was confident Nova Scotians would understand why the Government opted to raise new revenue.