Finance & Taxation | Nova Scotia

Nova Scotia budget – fifth consecutive surplus / tax cuts / debt remains a concern

February 27, 2020

The Nova Scotia government has produced its fifth straight balanced budget featuring both corporate and small business tax cuts. There were no fee increases for retailers. Taxes continue to increase on tobacco while Nova Scotia joined British Columbia as the only provinces to implement a tax on vaping. This is another good news budget but concerns remain regarding the province’s $15.7 billion debt. The province’s population sits at just under one million people yet the debt to GDP ratio will soon reach 34%. The most notable spending increases occurred in the previously announced capital budget, which has been increased to $1 billion. This is the largest capital budget in the province’s history, which will allow for significant investments in hospitals, schools and roads. The spending / tax cut combination has fueled speculation that the governing Liberals will call an early election in 2020.

Background

Tax Cuts:

  • The province will cut corporate taxes by 2%, bringing the rate down to 14%. The current rate of 16% is the highest in Canada.
  • The small business tax will also decrease by 0.5 % to land at 2.5%. This decrease will allow Nova Scotia to remain competitive with the neighbouring province of New Brunswick.

Surplus and Debt:

  • The 2019-20 surplus came in at $41.1 million based on total revenues of just over $11 billion.
  • The projected surplus for 2020-2021 will be $55 million based on total revenue of $11.6 billion.
  • The province’s $15.2 billion net debt is projected to increase to $15.7 billion by 2021.
  • The province currently spends $843 million per year to service the existing debt.
  • Debt to GDP ratio for 2019-20 was 33%. By 2024, it is projected to increase to 34%.

Other Budget Items of Note:

  • Corporate tax revenue decreased 5.5% in 2019-20. Expecting a further 9% decrease for 2020-21.
  • HST revenue increased 5.4%. Cannabis tax revenues are increasing slowly while tobacco tax revenues continue to decline.
  • Real GDP for 2019 was 1.9%. For 2020, it is expected to grow by 0.4%

Tobacco and Vaping:

  • Effective February 26, 2020, the tax on cigarettes increased by $0.02; the tax on cigars increased by 15% to land at 75% of the suggested retail price, and the tax on fine cut and other forms of tobacco increased to $0.40 per gram (a $0.14 to $0.22 cent increase, depending on the product).
  • Introduced a tax on vaping products starting in September 2020: $0.50 per/ml for the vaping liquid and 20% of the retail value of all devices sold.
  • Retailers will be required to obtain a permit to sell vaping products starting in July 2020.

Accessibility:

  • Continued small investments in the Accessibility Directorate to work in collaboration with businesses to achieve the goal of an accessible Nova Scotia by 2030.

Of Interest to Pharmacy retailers: $20.9 million to help Nova Scotians access the medications they need, including:

  • $8.9 million increase for new cancer drugs and utilization.
  • $6.1 million increase for seniors pharmacare.
  • $1.6 million increase for low-income family drug support.
  • $1.6 million increase for utilization increases for drugs used in special circumstances.
  • $1.4 million increase for flu shots and immunizations.
  • $1.3 million for family pharmacare.

Of Interest to Home Improvement retailers:

  • The $1 billion capital budget will result in significant construction, repair and renewal of hospitals, medical facilities, schools, public housing, etc.
  • $8.3 million increase to the Efficiency Nova Scotia Home Warming Program to offer home energy assessments and upgrades for homeowners.

Of Interest to Rural Retailers:

  • The province currently provides high-speed internet to 70% of homes and businesses in the province. The Internet for Nova Scotia Initiative will expand this coverage to 86% of Nova Scotians in 2020-21. The goal beyond the upcoming fiscal year is to expand high speed Internet coverage to 95% of Nova Scotians.

Fees:

  • With the exception of the vaping permit, there are no new fees or increases to fees and permits.

Next Steps

Retail Council of Canada (RCC) has commended the government on its ongoing balanced budgets and the upcoming tax cuts. RCC will continue to remind the government of the need to pay down the province’s debt.

If you have any questions or concerns, please don’t hesitate to contact Jim Cormier, Director (Atlantic) at:  jcormier@retailcouncil.org or (902) 422-414

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