PEI tables budget featuring small business tax reduction

PEI’s continued confidence in both its economy and its ability to manage the COVID-19 pandemic was demonstrated as it tabled it’s 2020-21 operating budget.  The budget features strategic investments in the economy, families, health care and the environment.  Of note to retailers was the reduction in the small business tax rate to 1 percent.  This reduction will position PEI as having the lowest small business tax rate in Atlantic Canada. 

Background Information

Deficit and Debt:

• The 2020-21 budget is projecting a deficit of $120 million with a net debt of $2.4 billion.
• The 2021-22 budget is forecasting a $112 million deficit with the net debt increasing to $2.6 billion. 

Personal Tax Relief:

• The basic personal exemption will be raised to $11,250.
• The low-income tax reduction threshold will be increased to $20,0000 .

Families:

• $2.9 million to implement a universal half-day Pre-Kindergarten Program.
• Funding to reduce childcare rates to $25 per day starting in January 2022.

Health:

• Of interest to pharmacies: $1.5 million for a free shingles vaccine for Islanders aged 65 and older.

Stimulus for the economy:

• A $3 million Tourism Activation Grant Program will be established to provide tourism businesses with non-repayable grants to assist with opening costs for the 2021 tourism season.  
• Innovation PEI will be launching programs this April which will provide the following: (1) an Innovation Fund to assist businesses refine and commercialize innovative products and services, (2) a strategic improvement fund to help businesses in our strategic sectors access professional expertise around quality assurance, operational efficiency and capacity building; (3) a small business assistance grant that will provide a flexible grant for small businesses needing to access professional services.
• The COVID-19 web presence program will be made permanent.  This program allows businesses to access $1000 to develop a traditional website and $2500 for an e-commerce website.
• A $1 million micro-loan program will be established to assist entrepreneurs from under-represented groups in accessing financing. 

Environment:

• Of interest to home improvement retailers: $5.6 million to support and expand the heat pump rebate program through efficiencyPEI.

COVID-19 Recovery:

• The government will move to consolidate the various departmental contingency funds into one $50 million fund.  This fund will be able to be used in a more coordinated manner to support economic recovery.

The government press release can be found here.