On June 19th, Prince Edward Island Finance Minister Allen Roach tabled a 2015-16 PEI budget featuring no major tax increases and the promise that next year’s budget will be balanced. Despite the fact that the government promised to balance the budget this year, the latest balanced budget promise is based on the Minister’s confidence that the province’s economy will continue to grow and unemployment will finally fall below ten percent.

This is a good news budget for retailers as it coincides with recent government decisions to reduce the size of government, curb spending and to provide tax relief to seniors, working single parents and low income Islanders.

For retailers selling tobacco, the tobacco tax increased immediately by 2.5 cents per cigarette and 4 cents per gram.


This was the first budget for the new government of Premier Wade MacLauchlan, who won his first mandate on May 4, 2015. The election delayed the release of this year’s budget.

The deficit for 2014-15 is $34.7 million.

2015-16 budget estimates:

  • $19.9 million deficit.
  • Revenues are estimated to be $1.65 billion ($1.64 billion in 2014-15) while net debt is estimated to peak $2.17 billion ($2.15 billion in 2014-15) before declining in the years to follow.
  • 35.2% net debt to GDP ratio.
  • Total program expenditures are up by 0.5%, which is less than projected inflation ($1.481 billion in 2014-15 and $1.476 billion in 2015-16).
  • Departmental spending (overall) is flat with some Departments receiving budget cuts. Even the Departments of Health and Education only received increases of approximately 1 percent. Postsecondary institutions fared better as funding for the University of Prince Edward Island increased by 8 percent and funding for Holland College increased by 2.5 percent.
  • The Minister is predicting a budget surplus of $11.9 million for 2016-17.


  • With the exception of the tobacco tax, there were no major tax increases.
  • PEI is projecting income tax revenues to rise by 4 percent from $839 million to $874 million. The Conference Board of Canada projects that personal incomes in PEI will grow 3.2 percent for 2016.
  • Prior to the budget, Minister Roach introduced legislation to provide tax relief to seniors, working single parents and low income Islanders. These measures will add / increase income tax credits while raising the income threshold at which a person can receive full value of the tax credits (from $15,000 to $17,000 per year).


  • The sustainability of the public sector pension plan continues to pose a concern as employee pension benefits are costing government an additional $8 million over last year’s projections. This continues to be a challenge for the PEI government as recent studies show taxpayers will be on the hook for $33 million in annual pension plan top ups until 2033.


  • The unemployment rate is expected to fall below 10 percent for the first time in 38 years.

New Programs:

  • $1.4 million in funding has been provided through the Assurance Systems Program to help the potato industry address recent issues around potato tampering.
  • On October 1, 2015, the government will launch a new PEI Generic Drug Plan, which will cap prescription drug payments to Islanders without drug insurance to under $20.
  • The government will launch a new strategy called Canada’s Food Island, to promote PEI’s land and sea based products, while helping Island producers conduct market research, develop new products and increase their markets.
  • Through the Agriculture Research and Innovation Program, $1.2 million will be provided to producers, industry and agri-business to support science backed improvements in the sector.

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