News Release Archive

Following is the text of the budget address delivered today in
the House of Assembly by Finance Minister Bernie Boudreau:


Mr. Speaker, I am pleased and privileged to present to the
Legislature, and to the people of Nova Scotia, the government's
budget for the 1996 97 fiscal year. It is a budget that is
historic, both for what it contains and for what it does not

The financial plan we are unveiling today is an achievement more
than two years in the making. Today, Nova Scotians share in an
accomplishment worthy of distinction.

What this budget does not contain, Mr. Speaker, is a deficit. For
the first time in a quarter century, we do not have to borrow
from the future to pay for the present.

What this budget does contain are the first tangible rewards to
come from the arduous climb back to solid financial ground.
Today, we can see a future with more promise than we have known
for many years.

Mr. Speaker, two years ago when I stood in this House to deliver
a budget, Nova Scotia was at the brink of financial ruin. Today,
our finances are sound. Two years ago, our economy was
foundering. Public services were in danger of collapse under the
weight of massive public debt. Today our economy is growing
stronger, tax relief is imminent, and our vital public services
are secure.

We have come a long way. Just three years ago, deficits in the
hundreds of millions of dollars were considered
business as usual. Our debt was exploding, and payments on that
debt were swallowing more and more of the money needed for
services to Nova Scotians.

This government embarked, first on an emergency program and then
on an orderly plan of recovery. But even with the latter,
immediate and dramatic action was required. Significant and, in
some cases, radical changes had to be made to the operations of
government. Anything less would have doomed us to failure.

Today, old inefficient bureaucratic systems are giving way to new
effective services to people. Public programs are safe, because
we can afford them. The way has been paved to a more competitive
Nova Scotia that can offer opportunity to all.

We have come a long way, but we have a way to travel yet. Our
province must stay on solid financial ground and build
competitive advantages that help business, industry, and
individuals grasp the opportunities those advantages will offer.


Nova Scotia's economy continued to grow in 1995. That growth
moderated to 1.6 per cent, in part because of the profound
structural changes that are taking place. The public sector is no
longer the engine of economic growth. Private sector productivity
is the source of new wealth and lasting jobs.

This reality was reflected in the province's employment picture
last year. In 1995, employment in the province grew by 1.1 per
cent. The private sector created 6,000 jobs, while Nova Scotia
experienced a net gain of 4,000 new jobs.

Mr. Speaker, Nova Scotians should welcome this fundamental
economic shift. For too long too, much of our economy depended on
government spending. Growth based on public spending was fleeting
at best, phoney at worst. It was not sustainable. It was paid for
with borrowed money and high taxes. The loans came due, but the
economy was anaemic from over taxation. That was the shape Nova
Scotia was in when this government came to office.

Today, our economic growth is driven by increased productivity in
the private sector. Government's role is to create conditions
that encourage private sector growth and new jobs. And, that is

The measured economic growth of the past year will continue in
1996, at an annual pace of about 1.3 per cent. However, as the
year proceeds, substantial new investment in large construction
projects will accelerate, fuelling more robust growth into 1997
and 1998. These positive developments include construction on
Highway 104 and a major expansion at Stora Forest Industries.

In the spring of 1997, Nova Scotia's economy will begin to feel a
new surge of vitality, as the largest single tax cut in this
province's history takes effect. Blending the Provincial Sales
Tax and the federal Goods and Services Tax into a single, lower
tax on consumption is positive tax reform. But it is much more
than that. It is a massive tax reduction and a massive boost to
our economy.

It is estimated by all three provincial governments that are
blending their sales tax with the GST, that it will increase
economic output in each province by at least 0.5 per cent.
Business costs will drop and investment will rise. In Nova
Scotia, 3,000 new permanent jobs will be created. The hidden
sales tax that was embedded in every product and service will be
gone, making those goods and services less expensive for Nova
Scotians, and more attractive to the world. That is real tax
reform. That, Mr. Speaker, is real job creation.


The government's priority upon assuming office in 1993 was not
one of our own choosing. It was thrust upon us. Fiscal recovery
was the pressing necessity. The expenditures of government had to
be put in line with its revenues. On the revenue side, we were a
province dependent on shrinking federal transfers. So the
government had to look to its spending as the only way to achieve
the essential budgetary balance.

Today, just more than two years into our four year Expenditure
Control Plan, we will post that balanced budget. Mr. Speaker,
this did not happen by accident, and it could not happen without
sacrifice. But surely no right thinking Nova Scotia will argue
that it was not necessary, for we were a province in danger of
drowning in a sea of our own debt.

The spending reductions we made were carefully designed to
protect Nova Scotians most in need, and to ensure continued and
enhanced quality of service in vital programming. Look at the

In 1993, 76 per cent of the province's program spending was
devoted to health, education, and social services. Today, 79.3
per cent of program spending is in those three areas of service
to Nova Scotians. Look back even further to gain a broader
historical perspective. In 1980, health spending accounted for 22
per cent of the provincial budget. Today it accounts for 28 per

In 1980, debt charges consumed only eight per cent of the total
provincial budget; today they consume 21 per cent. Therein lies
the problem. It is not a problem of this government's making, but
we have had, and will continue to have, the will to address it.

Mr. Speaker, there have been structural and operational changes
to the Government of Nova Scotia. Those changes have helped bring
spending and income into balance which, in turn, has secured the
future of vital public programs and services.

When this government reduced its costs we did it with the public
interest, not the provincial ledger, foremost in our minds. We
reduced the size of the civil service, not through wide spread
layoffs, but through a generous early retirement offer which has
been accepted by more than 3,000 public employees some 90 per
cent of those eligible.

We did it in our education system by taking money out of the
boardrooms and spending it in the classrooms, where it benefits
young Nova Scotians. We did it by cutting the overall government
spending by 12 per cent while increasing social services spending
by 13 per cent.

And we are doing it in health care, by maintaining and enhancing
access to clinical programs in every region of Nova Scotia; by
increasing funding for long term care, home care, and emergency
health services; by maintaining spending levels for mental
health; and through a labour adjustment plan that offers fair
treatment and retraining to workers leaving hospitals.

Mr. Speaker, bold action was required in this province, and this
government rose to that challenge. Fundamental change is never
easy. What is easy, is sitting on the sidelines and criticizing,
while preying on the fears of those who face uncertainty. Mr.
Speaker, this government will not be deterred in its efforts to
effect positive change by the relentless negativity of
opportunistic second guessers.

Now, Mr. Speaker, permit me to turn to the most recent successes
of the government's plan for fiscal recovery. When the 1995 96
fiscal year began, we estimated a current account deficit of
$28.1 million. As the year progressed, higher than expected
revenues from provincial and federal sources caused us to improve
on that estimate in each of our regular financial updates.

Additional spending pressures since January most notably in
health programs and to support victims of past abuse in
provincial institutions have driven program expenditures higher.

Despite this additional spending, I can report today that the
province will record a current account surplus of $17.6 million
for the 1995 96 fiscal year. This represents the province's first
balanced operating account in more than 15 years. We have
improved on our original estimate by $45.7 million, and improved
on last year's performance by some $102 million.

Aggressive debt management, combined with favourable interest and
foreign currency levels, accounts for a significant share of this
improvement. Debt servicing costs for the fiscal year just ended
will be $45 million less than estimated at the beginning of the

Mr. Speaker, in 1992 93 Nova Scotia posted a record budgetary
deficit - operating and capital - of $617 million. In 1995 96 the
figure was $181 million. In just three years, $436 million was
carved off the deficit of this province.

This year we will eliminate the budget deficit entirely. In
fiscal 1996 97, the government is bringing down a fully balanced
budget. Indeed, we are estimating a $2.8 million budget surplus.
We are finally in a position to reverse the debilitating cycle of
deficits, to begin to pay down the debt, and to reduce the debt
servicing costs that rob Nova Scotians of almost one billion tax
dollars a year.


1996 97 marks the first time in a generation that a government in
this province will achieve a balanced budget on combined
operating and capital spending. The province does not need to
borrow to pay for its operations or construction projects.

Revenues from provincial sources are expected to show solid
growth in 1996 97. Steady improvement in consumer confidence will
boost consumption tax revenue and push our provincial, own source
revenues 2.8 per cent above last year's total.

Federal transfers to the province are entering a new phase in
1996 97. The introduction of the Canada Health and Social
Transfer (CHST) marks a significant departure from traditional
federal provincial cost sharing arrangements. Social welfare
costs will no longer be subject to open ended cost sharing with

Under the new Canada Health and Social Transfer system, the
federal government will provide a block fund to support health
care, post secondary education, and social welfare in all
provinces. The total value of this national block fund will be
$3.5 billion less than the combined level of transfers last year.
In Nova Scotia's case that means we will lose more than $100
million this year alone.

Further reductions in the CHST will continue. In 1997 98 and over
the ensuing five years, Nova Scotia's share of the CHST pot will
decline as a per capita funding arrangement among provinces is
phased in.

Other areas of federal funding have also been capped or reduced.
Mr. Speaker, the writing is on the wall. This province cannot
look to Ottawa to solve its fiscal or its economic problems. The
combined effect of federal restraint measures, announced in
recent budgets, will result in cumulative losses to the province
estimated to reach $2.5 billion by the year 2000.


Clearly, the province must keep a firm grip on its spending in
order to maintain fiscal stability. Fortunately, we can approach
that task from the relative security of a balanced budget. We are
not nearly so vulnerable as we were just a few years ago.

With fundamental reform well under way in all major areas of
public spending, the government can now restore flexibility to
the budgetary process.

The program spending reductions imposed by the Expenditure
Control Plan will be lifted and replaced with new legislation
that focuses on government's bottom line. The repeal of
expenditure controls, two years ahead of schedule, is possible
only because of the success of the program itself. Through strict
adherence to expenditure controls, the government was able to
apply its revenue and debt servicing gains directly to deficit
reduction. The results are evident in the balanced budget we have
before us today.

Now we can restore government's ability to direct more of the
taxpayers' dollars to the priorities set by the people of Nova
Scotia. We will be introducing legislation that reflects the
principles and actions proposed by government in the white paper,
Shaping the Future. Those proposals have been endorsed by Nova

A balanced budget is a major accomplishment for Nova Scotia, and
a significant step toward a solid financial future. But our
province must still address the legacy of more than 20 years of
irresponsible spending and ever larger deficits. That legacy is a
debt of more than $8.5 billion. That is roughly $9,100 for every
man, woman, and child in Nova Scotia. Interest and other debt
charges cost the taxpayers of this province almost $1 billion a
year. Mr. Speaker, that's more than we spend to educate Nova
Scotia's children.

The legislated plan for long term financial stability will have
at its core, three goals:

1.   To ensure no government, present or future, takes Nova
Scotia back to the brink of financial ruin;

2.   To expand and enhance those vital services Nova Scotians
care about, but to do so responsibly   as we can afford to;

3.   To begin paying down debt so we can start to recapture the
$1 billion we lose each year to debt payments.

The new legislated program of fiscal stability and accountability
will limit the growth of program expenditures to growth in
revenues. Governments will have to live within their means.

The new law will limit additional appropriations. Total
expenditures in any given year will not exceed the spending
approved by this House by more than one per cent.

The legislation will require that, in the event a deficit is
incurred, that deficit must be recovered within two fiscal years.
Budgetary surpluses will be used to pay down debt or reduce Nova
Scotians' taxes.

Mr. Speaker, we've hit one milestone on the road to recovery
  a balanced budget. Now it's time to take aim at a higher
target. Now it's time to put Nova Scotia's future on solid
ground. That is the only way to secure health care, education,
and other vital services for today and tomorrow. That is the only
way to lower taxes and give Nova Scotia the competitive
advantages we need to prosper and create jobs. This legislation
will help achieve those ends.


Mr. Speaker, the government's role in the economy has changed, by
necessity and by choice. For 20 years governments in this
province threw money at economic problems. The only lasting
legacy of those efforts is a huge debt and high taxes. Today, the
government realizes that it can make a more positive contribution
to the economic well being of Nova Scotia, by reducing the
burdens it places on economic initiative.

Reducing taxes is the greatest single contribution the government
can make to Nova Scotia's economy. But it isn't the only
contribution, because taxes aren't the only burden government
places on business. Governments like to regulate. The problem is,
regulations are regularly enacted, but rarely rescinded. Over the
years, as new regulations were stacked on old, a complicated and
confusing system was created.

This year the government took two important steps toward
eliminating the confusion and streamlining the vast array of
regulations. We created a single department that will conduct the
lion's share of transactions between government and business, and
we embarked on a major deregulation effort.

The Department of Business and Consumer Services is a single,
open door to government. It combines nine agencies that are
responsible for more than 90 per cent of the transactions between
the Nova Scotia business community and the province. Soon,
businesses will be able to do all their transactions with the
government at a single access point, at service centres around
the province, or, when the technology is in place, through
on line computer or telephone links. The dollars and time lost in
dealing with the province will be dramatically reduced.

The new Department of Business and Consumer Services, in
partnership with the Economic Renewal Agency, will spearhead a
monumental government effort to review every regulation the
province imposes. The objective is to eliminate, combine, refine
and streamline. Mr. Speaker, making it easier to do business in
Nova Scotia, will help businesses grow and create new jobs.

Another redesign initiative that will pay off in increased
economic activity, is the merger of the former departments of
Transportation and Communications and Supply and Services. The
merger concentrates virtually all of government's capital
spending in one department. That department has lead
responsibility for building new public private partnerships. We
will use our capital budget to lever private investment. The
result will be more direct investment in the economy of the
province, more construction activity, and more jobs for Nova

The efforts of the past two years are paying dividends right
across government. The examples of better service and increased
efficiency are everywhere. Many of those examples can be found on
the pages of Government By Design, which for the third
consecutive year provides a detailed view of the government's
actions, plans, and goals. I am pleased to table Government By
Design, 1996 97, Building on Solid Ground.

The conditions for growth:
Mr. Speaker, the first order of business for any government
determined to create conditions that foster investment and
growth, is to put its own finances in order. We are doing that.
The next step is to provide business and industry with the
competitive advantages they need to compete in the world, so they
can grow and create jobs for Nova Scotians.

In 1995, Nova Scotia businesses competed as never before. The
value of exports from the province grew by 14.5 per cent last
year. That is a trend the government will continue to promote.
When we export our products, our services, and our know how, we
create new wealth here at home.

The Premier has lead trade missions and the government
aggressively markets Nova Scotia around the world. Potential
customers need to be told what we have to offer. And, what we
have to offer must be competitively priced. Local, provincial,
and federal taxes all add to the cost of our goods and services,
and hamper the competitive position of our businesses and

In the past two years, the Nova Scotia government has targeted
tax relief to strategic sectors of our economy and offered an
equity tax credit that makes investing here more attractive. Last
year alone, 32 equity tax credit applications were approved. This
year we will build on that initiative.

Incentives for investing in Nova Scotia:

Community based economic development holds the key to future
prosperity. Securing capital has always been the biggest obstacle
to community based ventures. Today, we are announcing initiatives
that will help bring Nova Scotians with ideas and know how
together with the capital they need to make good things happen.

To attract investment to community based economic initiatives, we
are expanding and enriching our equity tax credit program. Mr.
Speaker, the improvements I am announcing today, will place
eligible Nova Scotian enterprises among the most attractive
investment opportunities in the country.

Nova Scotia already offers a 30 per cent tax credit for equity
investment in Nova Scotia companies. This year we are greatly
enhancing that tax advantage, by offering a 20 per cent guarantee
on investments in qualifying community economic development (CED)
corporations and co-operatives. Through the combined effect of
these measures, the province is sharing the risk 50 50 with
investors. To target this investment incentive to communities
most in need, the guarantee will apply outside urban Halifax,
Dartmouth, Bedford, and Sackville.

The province is seeking agreement from the federal government for
RRSP contributions to be eligible for investment in community
economic development initiatives. As we achieve that agreement,
the pool of available capital will expand significantly. In
addition, we are expanding the allowable investments of CEDs to
include a broader range of businesses, and we will be introducing
legislation to simplify the rules applied by the Securities

Mr. Speaker, the combined force of these investment incentives
will open the door to a new source of capital for community based
enterprise. Communities across our province will have the tools
they need to raise funds for good ideas. Good ideas, backed by
the capital needed to get them off the ground, add up to new jobs
for Nova Scotians.

Tax cuts for individuals:

The best economic idea any government can have, Mr. Speaker, is
to put more money in the hands of the people. To do that, the
government has to take less. Two years ago this government moved
from single year to four year fiscal planning. At the same time
we put in place an economic and fiscal plan with the objective of
lowering taxes on Nova Scotians.

Today, Mr. Speaker, we can announce that in 1997 Nova Scotia will
be in a position to reduce the personal income tax rate of every
taxpayer by 3.4 per cent. That is a two point reduction in Nova
Scotia personal income taxes from 59.5 per cent of the federal
rate to 57.5 per cent. Nova Scotia will have the lowest income
taxes east of Alberta. This broad tax reduction, effective
July 1, 1997, is a tangible benefit of sound financial
management. This is an historic measure, Mr. Speaker, in that it
represents the first ever rate decrease in personal income taxes
in Nova Scotia.

Mr. Speaker, last year this government provided some $13 million
in tax relief to 155,000 low income Nova Scotians and their
families. Along with the income tax rate decrease, the Low Income
Tax Credit Program will be enriched in the upcoming year.

The value of the low income tax reduction will increase from $200
to $300 for adults and from $105 to $165 for each dependent
child. A family of four with a net family income of $15,000 will
receive a tax break of $930. The low income tax reduction is
gradually phased out as income increases above $15,000. Next
year, an additional 65,000 Nova Scotians will qualify for this
tax cut, and families with incomes of $15,000 and less will see
their taxes reduced by nearly two thirds.

The total value of this tax reduction to low income Nova Scotians
will reach $25 million in the 1997 tax year.

Help for the least advantaged:

Other low income Nova Scotians, Mr. Speaker, do not benefit from
tax relief simply because they do not pay taxes. This government
has recognized its responsibility to these Nova Scotians. The
budget of the Department of Community Services has increased over
the last three years, during a time when all other expenditures
of government were declining.

The government is determined that the least advantaged Nova
Scotians will not be forgotten as our fiscal picture, and our
ability to respond to real human need, improves. Beginning in
1997, we have budgeted an additional $8 million for Nova Scotians
most in need. The Department of Finance will work with our
colleagues in the Department of Community Services, and consult
with other Nova Scotians to determine the most effective way to
get this additional money in the hands of Nova Scotians who need
it most.

More tax relief:

Mr. Speaker, even while it provides additional assistance to
low income Nova Scotians, this government never loses sight of
the maxim that a job is the best social program. The expansion
and enhancement of our equity tax credit, and blending two sales
taxes into one will dramatically increase job prospects in Nova
Scotia. A number of other tax initiatives will be implemented
this year to build on the growing competitive advantages of doing
business in Nova Scotia.

*    Currently, machinery and equipment are included in business
assessments for municipal property tax purposes. That burden on
business was to be phased out over 10 years. To assist
capital intensive industry in becoming more competitive, the
phase out process will be accelerated. Machinery and equipment
will be eliminated from the property tax base within three years
instead of the original 10. The province will bear the cost of
this accelerated timetable by compensating municipalities for the
revenue loss.

*    Many smaller firms are not in a taxable position in their
early years and are therefore not able to take advantage of Nova
Scotia's corporate income tax credit that reduces the cost of
filing a prospectus. To assist these firms, we will be
implementing a seven year carry forward provision on this credit.

*    To assist first time home buyers, and as an incentive to new
home construction, the province will extend its New Homeowners'
Incentive Rebate Program until March 31, 1997. This program
provides a rebate of up to $3,000 for provincial sales tax on
building materials.

*    New environmental standards for businesses will help protect
Nova Scotia's natural heritage. To help Nova Scotia businesses
become certified to ISO 14000 standards, the province will
provide a 25 per cent corporate income tax credit on related
costs, up to $150,000.

*    To encourage the use of more environmentally friendly
alternative fuels, the tax rate on propane fuel will be lowered
from the current 13.5 cents per litre to 7 cents per litre
effective at midnight tonight.

Mr. Speaker, where possible, it is important to ensure that
equity raised in Nova Scotia is invested effectively in the
province. Currently, the province offers a 20 per cent tax credit
to individuals investing in a Labour Sponsored Venture Capital
Fund. To date in Nova Scotia, over $18 million has been raised
for such funds. To ensure that equity does not merely accumulate
and is applied to investments within the province, we will be
adjusting our legislation to mirror recent changes in federal
rules regarding Labour Sponsored Venture Capital Corporations.

The Labour Sponsored Venture Capital tax credit for investing in
these corporations will be reduced from 20 per cent to 15 per
cent on a maximum share purchase of $3,500. The holding period
for shares in provincially registered LSVC corporations will be
increased from four to eight years on shares acquired after


Mr. Speaker, since the imposition of the national Goods and
Services Tax in 1991, Nova Scotians, like most Canadians, have
struggled with two levels of sales tax. The confusing system of
tax stacked on tax is a burden for consumers and businesses

Earlier this week, Nova Scotia was one of three Atlantic
provinces to announce it has reached a Memorandum of
Understanding with the federal government that will see these two
taxes blended into one. Nova Scotia will be reducing its sales
tax from an effective rate of 11.8 per cent to just 8 per cent.
That amounts to a provincial tax cut of $120 million - without
question the biggest tax cut in Nova Scotian history.

Nova Scotians will benefit directly from this measure by paying
less sales tax on many items. Consumers will also benefit from
lower prices, as the reduction in the cost to business flows
through to the retail price. After all, Mr. Speaker, a tax on
business is a tax on consumers.

This measure removes sales tax from business inputs. Once it
comes into force on April 1, 1997, businesses making taxable
supplies in this province will be rebated for 100 per cent of the
taxes they pay on the goods and services they use. This Input Tax
Credit will improve our competitive position in the international
marketplace. Exports now account for 15.5 per cent of our
economic output, and that number is growing rapidly. That growth
will accelerate in the new tax climate, bringing new wealth and
new jobs to Nova Scotians.

Nova Scotians will benefit again, from increased economic
activity and more job opportunities, as businesses reinvest their
tax savings and increase production to meet growing demand.

Mr. Speaker, the province could not contemplate a tax reduction
of this magnitude without offsetting measures. As part of the
package, the federal government will provide Nova Scotia with
$249 million in adjustment assistance over four years. Even that
level of assistance will not nearly cover the province's revenue

To help ease the transition, the province will phase in the tax
reduction on the lease and purchase of new cars, trucks and heavy
equipment. Currently they are taxed at the combined GST PST rate
of 18.8 per cent. On April 1, 1997, the day the blended tax comes
into effect, the tax on these vehicles will be reduced to 17 per
cent. A year later it will be reduced to 16 per cent, and
finally, in the third year, it will be reduced to the blended
sales tax rate of 15 per cent.

This measure will not only ease provincial revenue losses, it
will cushion the automobile dealers from a buying lull that would
have preceded harmonization if the rate were to fall from 18.8 to
15 per cent overnight.

To help make harmonization financially feasible over the longer
term, the province must recapture some of the tax savings gained
by our largest and wealthiest businesses. Effective April 1,
1997, the province will introduce a corporate capital tax of 0.25
percentage points on financial capital. This tax will not apply
to businesses with less than $5 million in financial capital, and
will be phased in for businesses with financial capital of
between $5 and $10 million. Its full impact will be felt only by
firms with capital in excess of $10 million. About 1,000
businesses will pay the full Corporate Capital Tax. It is
expected the province will raise $45 million in revenue annually
from this measure.


Mr. Speaker, Nova Scotians are now learning about the complete
package of tax relief. It is the government's responsibility to
ensure that the tax system treats every Nova Scotian and all
segments of our economy fairly. The package of tax reform we have
outlined today and this week, achieves that objective.

In a year's time, and following discussions with Nova Scotians
from all sectors of our economy, a single, blended sales tax will
be put in place. Those discussions will centre around how to
maximize our economic and collective financial benefits. We will
listen to Nova Scotians' concerns and try to address those
concerns in the agreement we sign with the federal government.

We will be asking Nova Scotians how best we can assist those on
low and fixed incomes and ensure they too benefit from this
fundamental change in our tax system.

But this government's package of tax relief only begins with the
blended sales tax. Our program of tax reductions also includes a
personal income tax cut for every taxpayer; additional tax relief
for low income Nova Scotians; and major tax incentives for those
who invest in our province. The wealthiest companies in Nova
Scotia are being asked to make an additional contribution to
their province. That, Mr. Speaker, is fair.

Mr. Speaker, we can cut taxes only because we put our financial
house in order. Now that Nova Scotia is on solid ground, it is
time to start building; building a more competitive economy;
building secure public services; building on the new
opportunities offered in our changing world; building hope for
those who have lost hope; and building a better future for every
Nova Scotian.

Thank you, Mr. Speaker




Finance Minister Bernie Boudreau has announced the first ever
reduction in Nova Scotia personal income tax rates. The cut will
give Nova Scotians the lowest income taxes east of Alberta, and
the third lowest income taxes in the country.

On July 1, 1997, provincial personal income tax rates for every
taxpayer will be cut by 3.4 per cent. That is a reduction of two
points, from 59.5 per cent of federal taxes paid to 57.5.

"The province has sound finances for the first time in a
generation. We have balanced the budget, and we always said tax
relief would follow a balanced budget. The climb back to solid
financial ground has been difficult, but Nova Scotians will soon
see the tangible benefit of that effort."

The income tax cut is part of the government's "complete package
of fair and compassionate tax reform," the minister said. Other
components of the package include sales tax reform, a major
reduction in taxes for low income Nova Scotians and a Corporate
Capital Tax.

"We understand our responsibility to ensure the tax system is
fair and that it doesn't impose undue hardship on anyone in our

The income tax reduction will cost the province at least $32
million annually in lost revenue. Beginning July 1, 1997,
deductions from pay cheques will be calculated at the new 57.5
per cent rate.

"This is one of several measures that puts more money into the
pockets of Nova Scotians. When people have more money to spend,
that's good for the economy. This measure will add to the
momentum that will build in the economy after the single, lower
sales tax is in place in April, 1997."


Finance Minister Bernie Boudreau is doubling the province's tax
relief for lower income Nova Scotians.

"This major tax break for lower income Nova Scotians is an
essential part of our complete package of fair and compassionate
tax reform. This government understands its responsibility to
ensure the tax system is fair, and does not impose undue hardship
on anyone in our society."

The low income tax reduction will be increased from $200 to $300
for each adult and from $105 to $165 for each dependent child.
Single parent families may claim one child at the adult rate.
Individuals also qualify. The new rates are effective for 1997.

A family of four, with income of $15,000 or less will qualify for
$930 in tax relief. The tax break is gradually phased out as
income increases. For example, a family of four earning $25,000
will gain a tax reduction of $430. A family of four with income
just over $33,500 would not qualify. Families with income of
$15,000 or less will see their taxes reduced by nearly

Last year about 155,000 families qualified for the tax break, and
the province provided $13 million in tax relief. Beginning in
1997, the total value of the program will be more than $25

The expanded program means an additional 65,000 Nova Scotian
families qualify, including some 23,000 seniors. Significant tax
relief is now available to a much broader income range. Low
income earners, like all Nova Scotian taxpayers, will see their
income tax rates reduced by 3.4 per cent next year as well.

Mr. Boudreau said the government recognized that sales tax reform
doesn't offer the same benefits to lower income Nova Scotians as
it does to those with more disposable income.

"This tax relief lifts more of the tax burden from low income
Nova Scotians."


About 1,000 of Nova Scotia's largest and wealthiest corporations
will pay a 0.25 per cent tax on financial capital beginning April
1, 1997. The tax is expected to bring in about $45 million a year
in revenue.

In announcing the new Corporate Capital Tax in his 1996-97
budget, Finance Minister Bernie Boudreau said the measure will
help offset some of the $44 million in tax relief for individual
Nova Scotians. Those measures, a personal income tax cut and an
enhanced low income tax reduction, were also announced in the

The minister said these corporations will be some of the major
beneficiaries of the $120 million sales tax break coming as a
result of harmonization. The Corporate Capital Tax ensures a fair
distribution of the tax burden.

"Harmonization eliminates taxes from business inputs, so
obviously businesses will benefit greatly. We believe it is both
fair and responsible to ask the largest and wealthiest businesses
to help ensure this benefit is shared by all Nova Scotians."

Corporations with financial capital in excess of $10 million will
pay the tax at the 0.25 per cent rate. Several hundred additional
corporations will pay the tax, but at a lower rate. The tax is
phased in for firms with capital of between $5 million and $10
million. Companies with financial capital below $5 million will
not pay the tax.

"The corporate tax is an essential part of our complete package
of tax changes. Now that Nova Scotians can see the complete
package, I believe most will agree it is fair."

That package includes major tax relief for low income Nova
Scotians, a personal income tax cut for every taxpayer and
harmonization of the federal and provincial sales taxes.


Finance Minister Bernie Boudreau added a little green to his
budget Thursday, with two environmentally-friendly tax measures.

Mr. Boudreau cut the tax rate on propane fuel nearly in half. At
midnight tonight, the tax on propane fuel drops from 13.5 cents
to seven cents per litre. Propane-fuelled vehicles produce
considerably lower levels of ozone depleting and greenhouse gases
than other vehicles.

There are approximately 200 vehicles in Nova Scotia that run on
propane fuel.

The minister also announced that the province will provide a tax
credit to help companies meet new international standards for
environmental management. Those standards are expected to be
effective later this year.

"We're trying to take a more holistic approach to tax policy. We
need to look at how the tax system affects the environment as
well as a host of other considerations."

ISO 14000 is a voluntary standard, to be awarded to firms for
their environmental management practices. It is expected to be of
particular interest to the manufacturing and forestry industries.

Effective this year, firms will receive a non-refundable tax
credit for 25 per cent of qualifying expenses related to ISO
14000 certification. The maximum credit is $150,000. The province
offers a similar credit for ISO 9000, the standard for quality
management and assurance.

"As we move toward the 21st century, Nova Scotia wants to be at
the forefront of this new system. Our responsibility to future
generations of Nova Scotians is to wisely manage and conserve all
the resources they will inherit.


Nova Scotia's books are finally balanced, after almost a quarter
century of deficit financing.

In 1996-97, Finance Minister Bernie Boudreau is estimating a $2.8
million budgetary surplus. Just four years ago, the province
recorded a $617 million budget deficit.

The last time Nova Scotia achieved a fully balanced budget - had
sufficient income to cover both operating and capital expenses
- was the 1974-75 fiscal year.

In Thursday's budget the finance minister announced that the
province's strict spending controls, the Expenditure Control
Plan, will be repealed and replaced with a more flexible,
long-term plan designed to maintain financial stability.

The Expenditure Control Plan had been scheduled to run four
consecutive years. However, with a balanced budget this year the
level of expenditure reduction planned for years three and four
are no longer required.

Mr. Boudreau said strict adherence to the expenditure control
plan allowed the government to apply revenue gains and lower debt
servicing costs "to the bottom line ... the result is the
balanced budget you see before you today."

The minister said the government's long term financial plan will
be enacted in law.

"The force of legislation tends to make governments more
disciplined in their approach to public financing. It certainly
makes them more accountable, which is a goal of our long term

The long term plan will reflect the principles and actions
proposed in the government's recent white paper, Shaping the


Nova Scotia will modify its Labour-Sponsored Venture Capital Tax
Credit to bring it in line with recent federal changes, Finance
Minister Bernie Boudreau announced in today's provincial budget.

Since 1994 Nova Scotians have invested $18 million in
labour-sponsored funds. To date, those funds have made no
investments in Nova Scotian companies.

"We think that there is still value in the basic concept of
labour funds," said Mr. Boudreau. "But we have to target the
money very carefully. These changes keep the basic program in
place at a slightly reduced level."

The province's tax credit for investments in the fund will be
reduced from 20 per cent to 15 per cent and the maximum eligible
investment will decline from $5,000 to $3,500. The requirement to
hold shares will be increased from the current four years to

The minister also announced changes to the province's Prospectus
Costs Tax Credit.

The Prospectus Tax Credit, introduced in the 1995-96 budget, will
now include a three year carry-back, and seven year carry-forward
feature. This will help small firms meet the costs of issuing a


Nova Scotia will share the risk 50-50 with investors in Community
Economic Development (CED) initiatives, Nova Scotia Finance
Minister Bernie Boudreau announced today.

The government is expanding and enriching its equity tax credit
to attract new money to communities outside the urban Halifax,
Dartmouth, Bedford and Sackville area, and place eligible Nova
Scotian enterprises "among the most attractive investments in the
country," the minister said.

"Securing capital has always been the biggest obstacle for
community-based ventures. This measure will help remove that
obstacle, and bring Nova Scotians with ideas and know-how
together with the money they need to get those ideas off the

The province already provides a 30 per cent tax credit for equity
investments in Nova Scotia companies. Now it is offering to
guarantee 20 per cent of any investment in qualifying CED
corporations and cooperatives. The combined effect is
equally-shared risk between the province and the investor.

If, at the end of four years, the value of an investment in a CED
corporation is less then 20 per cent of its original value, the
province will make up the difference. If the enterprise goes
bankrupt, the province will ensure a minimum of 20 per cent of
the investment is returned.

In addition, to deepen the pool of available capital, the
province intends to make RRSP contributions eligible for
investment in CED initiatives. The allowable investments of CED's
will be expanded to include a broader range of businesses, and
rules applied by the Securities Commission will be simplified.

"These investment incentives will open the door to a new source
of capital for community-based enterprise. Communities across our
province will have the tools they need to raise funds for good
ideas. Good ideas, backed by the capital needed to get them off
the ground add up to jobs for Nova Scotians," Mr. Boudreau said.


Nova Scotia will accelerate changes to the municipal tax system
to provide manufacturers with property tax relief, Finance
Minister Bernie Boudreau announced in today's provincial budget.

Currently, for the purposes of municipal property taxes,
machinery and equipment are included in assessments, so
manufacturers pay property taxes on the equipment. That measure
was to be phased out by 2004.

Mr. Boudreau announced that it will be fully phased out by April
1998, instead.

"Manufacturers are vital employers in Nova Scotia. By reducing
their business costs, we secure existing jobs and help create new
jobs as tax savings are reinvested in their operations."

The province will fully compensate municipal governments for the
lost revenue. The cost to the province will be $2.3 million in
1996-97 and will total about $27 million by the year 2004.



Contact: Jim Vibert  902-424-4886

trp                 Apr. 25, 1996 - 2:10 p.m.