The Prince Edward Island government introduced its 2012 budget that follows a three-year plan
, which includes a focus to modernize its healthcare system, balance the books by 2015 and initiate job creation.
In the $1.58 billion 2012-2013 budget, Finance Minister Wes Sheridan said the province is in formal negotiations with the federal government to impose a 14 percent Harmonized Sales Tax
. It is expected to raise $25 million per year and the province argues that it will lower prices of between 75 and 80 percent of items for sale in PEI.
“This plan must be balanced. It must take into account Government’s role in our economic fabric – while pointing the way for a vigorous private sector,” said Sheridan in his budget address
Wednesday. “A careful blend of revenue and expenditure measures will achieve that balance.”
Prior to the HST, PEI maintains a 15.5 percent tax that combines the General Sales Tax and Provincial Sales Tax. Prescription drugs, home heating oil and children’s clothing will not be taxed, but adult clothes and electricity bills will.
“We’ve had our farmers, our fishers, our tourism operators, our small business people asking for the HST,” said Premier Robert Ghiz. “Our condition was always, if we could do it without hurting low-income Islanders in the province.”
The business community is all in favour of the HST. The Canadian Federation of Independent Business argues that the new tax will make the province more competitive, while the Canadian Restaurant and Foodservices Association told The Canadian Press
that it projects prices will be lower.
Opposition Conservatives reject the tax by calling it a cash grab for the government.
Other budget measures:
- Enhanced rebate program of $150 to $200 per year for households earning under $55,000.
- 300 public sector job cuts over the next three years.
- Health spending increase by 4.1 percent; most departments will see a decrease.
- Costs, fees and permits of public services will go up.
- Agency stores (six this year).
In the end, the budget forecasts a $74.9 million deficit by next year, which will be down from $78.6 million of the fiscal year that ended in March. By 2015, it projects a $3.6 million surplus.
Due to anger in the province, voters supported a referendum that would repeal the HST in British Columbia
. It will be removed April next year and force the province to pay back $1.6 billion to the federal government.