Nova Scotia Premier Tim Houston has announced a one per cent cut to the HST next year.
The provincial part of the HST will drop to nine per cent from 10, meaning Nova Scotians will be paying a combined HST of 14 per cent.
“Lowering the HST will make things more affordable for all Nova Scotians, everybody who purchases something. So that’s why we’re taking this step,” Houston told reporters during a Wednesday news conference.
“We’re mindful of the revenue impacts and the need to provide services, but we know that the lower HST is a solution for Nova Scotians.”
The province confirmed it has given notice to the federal government about the impending change, but the move still requires legislation. Houston said the tax cut would take effect April 1, 2025.
Under a new piece of Nova Scotia’s Elections Act, the next provincial election is slated for July 15, 2025, but the HST announcement comes at a time of growing speculation of an early election call.
On Tuesday, Northside-Westmount MLA Fred Tilley crossed the floor from the Opposition Liberals to join the governing Progressive Conservatives.
Houston was asked whether Tilley’s switch was the prelude to an eventual snap election call sometime later this week. The premier didn’t reply directly but mused about the current political landscape.
“It is probably obvious to everyone that there is incredible turmoil in Ottawa right now and what happens in Ottawa can have a significant and immediate impact on Nova Scotia,” he said. “I’m watching … and I need to make sure that Nova Scotia is in a strong position to bargain with the federal government and be treated fairly.”
NDP Leader Claudia Chender likened Wednesday’s announcement to an election stump speech. While the tax cut will likely be welcomed by the public, she said, it does not address the key problems facing Nova Scotians.
“I think the challenge of the one per cent HST cut is that it benefits the people who buy the most. I think what we need right now is relief that helps people who need it the most. And this isn’t that,” said Chender.
Meanwhile, Liberal Leader Zach Churchill pointed out his party has already proposed a two percentage point cut to the HST and called out the Houston government for not doing the same.
“All he would have to do to do a two per cent cut would be to actually stick to his budget instead of overspending every time and treating this money like it’s his own political war chest,” said Churchill.
HST is second largest revenue source
HST is the second largest provincial revenue source.
According to the province’s calculations, the one percentage point reduction to the provincial value-added tax rate is expected to reduce revenues by about $260.8 million in the 2025-26 fiscal year; $265.5 million in 2026-27; and $272.4 million in 2027-28.
Houston’s announcement follows last month’s fiscal update for the 2024-25 budget, when Finance Minister Allan MacMaster warned that the deficit forecast last spring had increased by $187 million to $654 million, due to higher department spending and a slowing of tax revenue.
However, the Progressive Conservative government has consistently overestimated its deficit by wide margins in recent years and has continued to spend large amounts outside of the spring budget process.
When asked whether his government was taking a contradictory stance in advancing a tax cut at this time, Houston said Wednesday that he sees enough signs of progress in the provincial economy to give people a break.
“We are at a point in time where our taxes are holding us back, and if we can address those then we can unleash more potential,” he said.
The Canadian Taxpayers Federation believes the tax cut will make a difference.
“A one per cent HST cut according to our analysis will save the average Nova Scotian household about $350 a year, so that’s a great victory for taxpayers in Nova Scotia,” said the federation’s Atlantic director, Devin Drover.
Three other provinces have a harmonized sales tax. Newfoundland and New Brunswick have theirs set at 15 per cent, and Ontario is at 13 per cent.
— with files from The Canadian Press and Global News’ Skye Bryden-Blom