REDUCING DEFICITS AND dealing with the harmonized sales tax (HST) are among the major initiatives introduced in several 2012 provincial budgets. However, in addition to some tax increases, several provinces also have managed a few tax breaks.
Dealing with the HST is the most common theme among the provincial budgets, although there is a wide range in the results. Prince Edward Island will impose the tax as of April 1, 2013, the same day the HST will be eliminated in British Columbia.
B. C. has been forced to abandon the HST, which it had introduced on July 1, 2010, after the tax was narrowly rejected in a referendum. The resulting need to repay the federal government the $1.6 billion in HST transition funds has forced B. C. to keep its small business tax rate at 2.5% rather than eliminate it in 2012 as planned.
P. E. I.’s HST will be 14%. The current effective combined rate is 15.5% – made up of 10% in provincial sales tax (PST) on top of the 5% goods & services tax. Like other provinces moving to the HST, P. E. I. will introduce an enhanced refundable tax credit for residents with modest incomes. P. E. I.’s rate will not apply to home heating oil or children’s clothing and footwear; it will apply to electricity, but that cost will be offset by a recent 14% decrease in electricity rates.
Quebec is scheduled to implement the HST fully – the province currently has a hybrid version – as of Jan. 1, 2013.
The other HST-related change is Nova Scotia’s plan to drop its rate to 14% from 15% when the province’s budget returns to a surplus position, expected in 2014, and then to 13% the following year. Nova Scotia had temporarily increased its rate to 15% from 13% in July 2010 in an effort to reduce its deficit.
The only personal income tax hike is Ontario’s imposition of a 2% surtax on annual taxable income over $500,000. (See story on page 1.) The minority Liberal government has added this new tax in a deal to secure the support of the New Democratic Party.
With the defeat of the Quebec Liberal government in the Sept. 4 election, that province’s budget is no longer relevant. The only fiscal measure that Pauline Marois, the new Parti Québécois (PQ) premier, has announced is that the proposed increases in post-secondary tuition fees will be cancelled.
The PQ platform includes adding two more personal income tax brackets and eliminating the health premium.
@page_break@ Here’s a look at other tax measures in the provincial budgets:
PERSONAL INCOME TAXES. B. C. will lower its basic personal deduction to the 2009 level of $9,373 as of April 1, 2013, from the $11,088 in effect as of 2010. That move had been intended to provide relief from the imposition of the now-defunct HST.
Manitoba has raised its basic personal exemption by $250.
HOUSING CREDITS. B. C. and Saskatchewan have introduced refundable first-time homebuyer tax credits. B. C.’s is a temporary measure to ease the transition back to the PST through a credit of 5% of the price of a newly constructed primary residence – offers to purchase must be made between Feb. 21, 2012, and March 31, 2013. Saskatchewan’s credit is permanent and provides up to $1,100 on the first $10,000 of a qualifying purchase made after 2011.
B. C. has introduced a seniors home-renovation refundable tax credit of up to $1,000, effective as of April 2012.
PROPERTYTAXES. The education portion of Alberta’s 2012 property taxes will remain at 2011 levels.
New Brunswick has increased its real property transfer tax rate to 0.5% from 0.25% as of June 1, 2012.
OTHER SALES TAXES. Manitoba will charge PST on property and casualty, group life, land title and travel insurance premiums as of July 1, 2012. Premiums for health, accident, sickness, Autopac (mandatory public auto insurance) and individual life policies will continue to be exempt.
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