The two premiers are calling on Ottawa to cover the province’s costs from the tax holiday promised by the Trudeau government.
Prime Minister Justin Trudeau on Thursday said he would aim to increase the GST and HST on some goods through mid-February to alleviate some of the affordability pressures people are experiencing in the post-pandemic era. said.
However, the five states that have a unified sales tax that combines state and federal taxes on goods and services administered by the federal government will eliminate the entire state tax.
This measure would be a major blow to some states’ finances. New Brunswick Premier Susan Holt said Friday the tax cuts could cost the province $62 million.
“Without engagement and agreement with us, they cannot extract $62 million from New Brunswick’s revenue,” she told reporters.
Prince Edward Island Premier Dennis King expressed similar concerns Friday. He said the measure would cost the state $14 million.
“There is no agreement that the federal government is going to step in and give us that money or make us feel better in any way,” King told the state House. “We’ll continue to work with them and see what we can do because that will leave a little bit of a hole in our budget.”
King said he was willing to work with the federal government on affordability policies, but said he had received no notice of a tax holiday.
“We learned of this in a press conference that came to our desk yesterday. We did not receive a polite call saying it was coming or any kind of request for our opinion,” he said. Ta.
Asked if he expected Ottawa to recover compensation from the province, Holt said he was “optimistic.”
Asked about the prime minister’s concerns on Friday, Trudeau declined to commit to replenishing lost revenue to provinces.
“I think every provincial government across the country understands how important it is to be there for Canadians who are facing serious cost-of-living pressures,” he told reporters.
“We hope that states will see the challenges their residents are facing and realize this is a way they can help their people.”
Not all states are concerned about the federal tax holiday. Ontario had already excluded the provincial portion of the HST from some items proposed for federal exemptions, including children’s clothing, shoes, diapers, books and newspapers.
“We did it two years ago. We just didn’t go out and do cartwheels. 80 of the things they’re going to do,” Ontario Premier Doug Ford said at a press conference Friday. %, we are doing it.” .
“I have to commend them. Every government, regardless of their political background, wants to put more money into people’s pockets. Good for them.”
Newfoundland and Labrador Premier Andrew Furey also supported the federal plan and said his government would follow suit.
“Our government is focused on affordability for families in Newfoundland and Labrador,” he wrote in a post on We will eliminate it.”
Nova Scotia is currently in the midst of an election campaign, so the provincial government is in interim mode.
The Fed is underestimating costs: The Economist
The federal government says the tax cut will cost the federal Treasury an estimated $1.6 billion in unexpected revenue.
However, economist Trevor Tombe estimates that covering the state portion would make the actual cost of the tax cut almost double the government’s estimate.
“For the HST state, the total cost would be in the region of $3 billion, taking into account the compensation granted in the tax adjustment agreement,” Toumbe said in a post on X.
