Facing $1.8B deficit, Newfoundland and Labrador passes controversial budget

The harbour of the town of Bauline, Newfoundland and Labrador is seen on Oct. 10, 2011. The province is grappling with a $1.8 billion deficit.
The harbour of the town of Bauline, Newfoundland and Labrador is seen on Oct. 10, 2011. The province is grappling with a $1.8 billion deficit. THE CANADIAN PRESS/Andrew Vaughan

ST. JOHN’S, N.L. – The government of Newfoundland and Labrador’s controversial 2016-17 budget has passed in the house of assembly.

The main budget bill was passed on Tuesday, but other tax bills, including a wildly unpopular “deficit reduction levy,” will be voted on separately.

READ MORE: Has Newfoundland and Labrador hit rock bottom?

The levy was among a series of tax measures included in last month’s much-maligned provincial budget aimed at helping the Liberal government of Premier Dwight Ball deal with a massive $1.8 billion deficit.

Sweeping tax hikes, fee increases and the temporary deficit reduction levy to be paid by anyone earning more than $50,000 of taxable income a year have sparked outrage in the province.

Levy payments that escalate based on earnings were originally announced in last April’s budget for anyone making more than $20,000 of taxable income. But Ball said last week that Ottawa had given the province a fiscal break by deferring monthly equalization loan repayments until 2022.

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The extra cash allowed Ball to scale back the levy, meaning about three quarters of tax filers in the province are exempt.

Earners with a taxable income of $55,000 will now pay $100 a year, while those who earn $100,000 would pay $700 with amounts increasing as income rises.

Even with the array of tax and fee grabs, the government projects a deficit of about $1.8 billion this fiscal year. The province has been in fiscal straits since the oil price collapse starting in mid-2014 saw revenues from its offshore sector plummet.

WATCH: Newfoundland and Labrador Premier Dwight Ball talks $2-billion-plus budget woes 
Click to play video: 'Unprecedented times in Newfoundland and Labrador: Ball' Unprecedented times in Newfoundland and Labrador: Ball
Unprecedented times in Newfoundland and Labrador: Ball – Feb 7, 2016

Former Liberal member Paul Lane was kicked out of caucus earlier this month and now sits as an independent after saying the budget is too hard on people. He has openly encouraged other Liberals to follow suit.

“I can’t tell you the number of calls, email messages I’ve received … literally thousands,” Lane said Tuesday in the legislature. “What I’m hearing is the same message from people: It’s too much, too fast.

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“Quite frankly, even members on the government side have said it’s a tough budget.”

Taxpayers expected increases but the widely protested budget is enough to cost some already struggling families their homes, Lane said.

“There has to be a reasonable balance.”

He wasn’t the only one urging backbench Liberals to revolt.

“This is the big chance,” Progressive Conservative member Steve Kent said in the legislature before the budget vote.

“Today’s your chance to do the right thing and stand with your constituents instead of your government.”

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