Budget reshuffles tax system, but maintains deficit

Finance Minister Kevin Doherty. Screenshot from Legislature Website.

Finance Minister Kevin Doherty tabled a budget Wednesday that will raise PST rates and close down STC, while leaving a $685 million deficit.

The budget also includes billions for infrastructure projects, but no major capital commitments for Prince Albert.

Doherty said the budget was driven by a need to plug a $1.3 billion hole left by persistently low resource royalties.

He said that forced the government to look for new revenue sources. PST rates will go up by one percentage point and apply to some purchases that were previously exempt, including restaurant meals and children’s clothing.

But the government plans to offset that with a slight drop in corporate and personal tax rates. All in all, the new tax measures are expected to raise $900 million.

In last year’s budget, Doherty committed to a swift return to fiscal balance. On Wednesday though, he suggested that would have threatened the province’s nascent recovery.

“After careful consideration, our government made the decision that returning to balance in one year would have been too drastic of a shock to the economy and to the delivery of government programs and services,” he said in the Legislative Assembly.

The budget foresees a smaller deficit of just over $300 million in 2018/19, followed by a small surplus the year after that.

For more on this story, please see the March 23 print or e-edition of the Prince Albert Daily Herald.