On April 7, 2017, the Prince Edward Island (PEI) government tabled a provincial budget with a small surplus. This is PEI’s first balanced budget in a decade.
The only tax relief offered in the budget was a small increase in the Basic Personal Income Tax Exemption threshold for 2017.
Retail Council of Canada (RCC) is pleased that the PEI government was finally able to balance its budget. Given the improving financial numbers, retailers are hopeful that future budgets will provide meaningful tax relief to the business sector. In recent years, PEI has lost its regional tax advantage through increases in both corporate and consumption taxes.
The budget noted that PEI’s population is growing at 1.3%, which is the fastest in Atlantic Canada. Average weekly wages grew by 2.3% in 2016, which was the second fastest growth among the provinces. Tourist overnight stays increased 10.2% in 2016 to reach an all-time high for PEI. These statistics bode well for retailers searching for customers.
Measures bearing on consumer spending or on retail goods and employment include:
Deficit / Debt: The deficit for the 2016-17 fiscal year is $17.9 million. For 2017-18, the government is projecting a $600 thousand surplus on a budget of $1.8 billion. The debt for 2016-17 is almost $2.2 billion for a population of only 148 thousand people.
Taxes: The budget also featured an increase of two percent in the personal tax exemption. The threshold moved from $8,000 to $8,160, which is still the lowest in the country. The spouse and equivalent to spouse amounts will also be adjusted by two percent.
RCC welcomes the balanced budget but remains concerned that Departmental spending exceeded budgetary estimates by an average of almost two percent.
Real GDP: growth is expected to be 1.4% for 2016 and at 1.3% for 2017.
Health: $600,000 to implement a Universal Influenza Immunization Program. This builds on the current program, which is only for children.
RCC will congratulate the government for eliminating the deficit but will remind the government of the need to keep Departmental expenditures in check. RCC will continue to push the government on the need to provide corporate and HST tax relief to the retail community.