Nova Scotia’s new Finance Minister, Michael Baker, has tabled a budget, “loaded with goodies, notably personal and corporate tax cuts and another budget surplus”, according to a report from BMO Nesbitt Burns.

The N.S. government reported a budget surplus of $151 million for fiscal 2005/2006, Nesbitt says, down slightly from the previous year’s record high of $165 million on much higher petroleum royalties. “Although this fiscal year’s balance is a more conservative figure, the surplus should continue to firm as energy prices remain high,” it says, adding that the government is forecasting a surplus of $71.9 million for 2006/2007 with more substantial surpluses to follow out to 2009/2010.

Revenues are expected to rise 5.1% in 2006/2007, it notes, driven by an almost tenfold increase in petroleum royalties over last year’s estimate. Also, federal revenues to the province are expected to increase 4.1%.

“Some tax changes announced in today’s budget include raising the basic personal exemption starting in 2007 by $1,000 over four years to $8,231 and full indexation to begin in 2011. The province plans to accelerate and extend last year’s large corporation capital tax cuts and eliminate the tax by 2012. The small business income threshold will rise $50,000 to $400,000,” Nesbitt adds.

However, it says there was no mention of the dividend tax credit in this budget. “Other tax measures were introduced for health and child care, graduates and used motor vehicles. As well, the government announced a new energy efficiency tax credit for corporations. Overall, this is a stimulative budget for the province,” Nesbitt concludes.

Program expenses are anticipated jump 7.1%. All program budgets were increased, but health care (+7.4%) and education (+5.3%) will get a hefty boost, it says.

Net direct debt as a percent of GDP should fall to 38.2% this fiscal year, Nesbitt reports, a sharp decline from the 48.7% high in 1999/2000. “The province’s borrowing requirements will fall slightly to $909 million from the revised 2005/2006 estimate, but rise significantly from last year’s budget estimate of $340 million,” it adds.