Nova Scotia Finance Minister Diana Whalen tabled a 2015-16 Nova Scotia budget featuring no major tax increases and the elimination of 320 fulltime government jobs.

The government largely ignored last year’s Broten Report that had recommended significant tax changes, including an expansion of the items subject to the Harmonized Sales Tax (e.g. printed books, kids clothing, footwear, diapers, feminine hygiene products) and the introduction of a carbon tax. RCC had warned the government against further tax increases given the fact that Nova Scotia is already the highest taxed province in the country.

The only notable tax increase was on cigarettes, which will immediately increase by 2 cents per unit.

RCC questions the government’s spending estimates for 2015-16. Given Nova Scotia’s aging population, it will be challenging for the government to limit the Department of Health’s spending to an increase of only 0.8% for the coming year. This will be the smallest increase in a decade. Given that the government is predicting a budget surplus for 2016-17, cost overruns in any of the fiscally constrained Departments (most notably in the Department of Health) could place the balanced budget goal in jeopardy.

The budget’s effect on retailers will be most pronounced in communities where government jobs are cut.

Background:

The deficit for 2014-15 is $102 million.

2015-16 budget estimates:

  • $98 million deficit.
  • Revenues are estimated to be $9.9 billion while net debt is estimated to be $15.1 billion.
  • 36.3% net debt to GDP ratio.
  • Offshore royalties are down 55%.
  • Department spending (overall) is up 0.7% with five departments getting budget cuts.
  • The Minister is predicting a budget surplus for 2016-17.

Taxes:

  • No major tax increases.
  • Exception: The tobacco tax will increase across the board by 2 cents per unit.
  • The affordable living tax credit will remain in place.
  • The Healthy Living Tax Credit has been eliminated.

New / Revamped Programs:

  • The government is creating a $6 million Creative Economy Fund for film, animation, music/sound, recording and the publishing industry. This program won’t begin until April 2016.  The fund will be administered through Nova Scotia Business Inc.
  • The government will create a new Business Department to foster one of the most competitive and business friendly environments in Canada, fostering entrepreneurship and innovation, coordinate business development and handle regulatory recommendations in concert with a similar body in New Brunswick
  • $20 million in additional funding for public schools (math/literacy strategies, class sizes)

Negative Effects of the Budget: Universities, the Film Industry and Government Job Cuts

  • After years of managing through a 3% cap on tuition fee increases, Nova Scotia universities/colleges will be allowed a one-time market adjustment to tuition.  Following this fee hike, university tuition fees will return to the 3% cap for undergraduate students from Nova Scotia.  Out of province students (at all levels) and graduate students (regardless of hometown) will not be protected by the cap.  The out of province student bursary has been eliminated.
  • The Film Tax Credit has been changed from 100% refundable to only funding the first 25% of a production’s costs.
  • The provincial government will eliminate 320 full time equivalent positions.  173 layoff notices have already been delivered (between February and today).
  • The Department of Economic Rural Development and Tourism has been eliminated.
  • The office, Film and Creative Industries Nova Scotia has been eliminated.

If you have any questions or concerns, please don't hesitate to contact Jim Cormier at: [email protected] or 902-422-4144