Prince Edward Island’s 2016-17 operating budget invests in critical public services while setting the stage for a return to balance next year.
“Although our fiscal plan projected that the budget could be balanced this year, Islanders have told us it should not be done at the expense of essential services like health, education, and programs to protect those most in need,” Finance Minister Allen Roach said. “This budget demonstrates that we remain committed to spending public funds wisely, creating sustained prosperity for all Islanders, and bringing the budget into balance next year.”
The yearly deficit is projected to decrease to $9.6 million in 2016-17 as a result of the revenue and expense measures in this budget. A $9.2 million budget surplus is projected for 2017-18.
Personal income tax fairness measures will bring relief to low and modest-income Island households in the upcoming 2016 tax year. These include increasing the Basic Personal Amount to $8,000 from the present $7,708, which will potentially impact all 84,000 Island taxpayers. Additional measures will exempt 700 Islanders from paying provincial income tax this year.
Together with personal income tax measures that reduced the taxes of 12,000 seniors, working single parents, and lower-income Islanders in the 2015 tax year – exempting 2,300 from paying provincial income taxes altogether – Islanders will save an estimated $7.3 million in income taxes over this two-year period. The refundable Prince Edward Island sales tax credit will also increase by 10 per cent.
Prince Edward Island has a diverse economy but has not been immune to the economic pressures facing the rest of Canada and the world. The provincial economy grew less than projected in 2015 (1.2 per cent), so the province needed new revenue to make the investments in critical services that Islanders have asked for.
As a result, the provincial portion of the Harmonized Sales Tax will increase by one percent, bringing the combined federal-provincial HST rate to 15 per cent on Oct. 1, 2016. This will add $11 million in revenue in 2016-17 and another $22 million in 2017-18 that will go directly to core investments including:
• ensuring sustained health and wellness ($18.2 million);
• improving education and invest in youth and prosperity ($7.1 million);
• supporting our most vulnerable populations ($2.6 million); and
• helping grow employment and our economy ($7.1 million).
At the same time, government continues to practice fiscal responsibility by streamlining its operations and finding savings where possible. While investing in critical front-line services, government will continue to make public administration as cost-effective as possible.
For budget documents and more information, visit www.gov.pe.ca/budget.
In 2015, Prince Edward Island led Canada in the growth of:
• international exports (15.4 per cent); and
• average weekly wages (3.5 per cent).
Manufacturing shipments reached a new all-time high in 2015, increasing 1.5 per cent.
Tax-fairness measures in the 2016-17 budget:
• the basic personal income tax amount will increase to $8,000 from the present $7,708, saving approximately 84,000 Islanders a total of $2.4 million each year;
• changes to the Low Income Tax Reduction Program will bring relief to an estimated 11,000 Islanders and save them $775,000 annually; and
• the refundable Sales Tax Credit amounts will be enhanced, increasing benefits by $700,000 and assisting some 50,000 Islanders;
• the Real Property Transfer Tax will be eliminated for all first-time home buyers, saving $500,000 for Islanders entering the housing market for the first time.