The Prince Edward Island (PEI) government closed the books on the 2017-18 Budget. The final budget numbers produced a surprise surplus increase from $601,000 to $75.2 million. The increase came as a result of higher than expected provincial tax revenues.
The government’s surprise budget numbers resulted in an announcement of a further tax cut for small businesses and another increase in the basic personal income tax exemption.
This is generally good news for Island retailers but it underscores the fact that Island businesses are paying far too much tax.
The Finance Minister announced that the $500 increase in the basic personal tax exemption, which had been scheduled to come into effect in 2019, has instead been made retroactive to January 1, 2018. This tax relief measure has been combined with another $500 increase in the basic personal tax exemption for 2018 that was announced in the province’s spring budget. In 2018, the threshold was $8,160. With the latest announcement, the amount of income Islanders can earn without paying taxes has increased by $1,000 this year, to $9,160. PEI’s threshold is still among the lowest amounts in Canada but it has increased each year since 2016.
The small business tax rate will decrease again on January 1, 2019 to 3.5%. This 0.5% reduction follows another 0.5% reduction from the 2018 spring budget.
RCC will congratulate the government for continuing to lower taxes but will remind the government of the continued high tax rates that Islanders continue to pay.
If you have any questions or concerns, please don’t hesitate to contact: Jim Cormier, Director (Atlantic) at [email protected] or 902-422-4144