News Release Archive

           By Bernie Boudreau, Minister of Finance

Taxes are a hot topic for any government, any time. A government
willing to take on major tax change is a government willing to
take on a big challenge.

People are understandably skeptical when told they will save
money as a result of tax reform. Their own experience tells them
taxes go up, not down. It's also predictable that critics, with a
variety of motives, will rail against most any proposed change.
Add to this the fact that comprehensive tax reform is hard for
anyone but an economist to fully understand, and you wonder why
Nova Scotia's government would touch the subject.

The answer is simple. The tax package we have announced is right
for Nova Scotia. It is good for our economy, for our businesses
and yes, for Nova Scotian consumers too.

Let's get back to the facts. Taxes are going down in Nova Scotia.
Next year, when the tax changes are in place, the province will
collect less tax - some $120 million less under harmonization
than we will collect this year. Lower taxes will bring lasting
economic growth, attract new investment and create jobs.

You don't need to take my word for it. The facts and figures are
contained in a detailed report prepared by the Department of
Finance and endorsed by independent economists and tax experts.
Anyone who takes the time to objectively read the full report
will see it confirms the benefits we have stated from the

Tax reform will build a stronger economy and create jobs. The
facts show tax reform means economic growth worth $174 million to
Nova Scotia. To economists, that represents 0.8 per cent of the
1997 Gross Domestic Product. For Nova Scotians, that represents
at least 3,000 permanent, full-time jobs.

Tax reform gives Nova Scotia business a new competitive
advantage. That's an advantage for all Nova Scotians, but
particularly for those looking for work, because businesses with
a competitive edge succeed, grow and create new jobs. In fact,
Ontario Premier Mike Harris has complained that tax harmonization
gives Atlantic businesses an "unfair" advantage over their
competition in Ontario.

A tax break for business is a price break for consumers. Today,
consumers are paying inflated prices because we pay sales taxes
buried in the cost of everything we buy. When the manufacturer
paints the shop, the tax on the paint becomes buried in the cost
of the product. When the wholesaler buys new shelves, the tax is
buried in the cost of the product. When the retailer advertises a
sale in a flyer, the tax on the flyer is buried in the cost of
the item. Harmonization removes those buried taxes.

Savings will vary depending on what you buy, but the principle is
the same whether you're buying toothpaste, toys or a television.
Tax breaks for business mean price breaks for consumers.

Assuming businesses pass on just 50 per cent of their savings
from harmonization, Nova Scotian consumers will pay $61 million
less. Nova Scotians at all income levels will save. An average
family, making between $20,000-$30,000, will save over $100 a
year. Independent economists and businesspeople tell us our 50
per cent "pass through" assumption is too cautious. They say
businesses will pass most of their tax savings on to consumers.

Why do we believe business will pass any tax savings along? 
Because in a world of competition, it will be in their own self
interest. Lower prices bring more customers into their stores and
sharpen the competitive edge against businesses from outside Nova
Scotia. Our businesses sell more at home and abroad, so they make
more money.

We believe savings from price declines alone will more than make
up for the broader tax base. However, to further stimulate
economic growth and ensure essentials remain affordable for all
Nova Scotians, our most recent budget included some $52 million
in additional tax relief and benefits.

Provincial personal income tax will be reduced by 3.4 per cent,
for every taxpayer. That's a $32 million annual tax cut.

The value of the low income tax reduction program will double
next year, to $25 million. Most families earning $19,000 or less
will no longer pay any provincial income taxes. More than 200,000
Nova Scotians will now benefit from the low income tax reduction.

An additional $8 million has been targeted to assist low income
Nova Scotians who will not benefit from tax reductions, because
they do not pay income taxes.

In 1993, there were skeptics when we said we would balance the
budget. This year, the skeptics were silenced when, for the first
time in a generation, the Nova Scotia government brought down a
balanced budget.

Nova Scotia is back on solid financial ground. The balanced
package of tax reform will help Nova Scotians build a stronger
economy on that solid foundation.


Editor's Note: The complete analysis, entitled Tax Reform in Nova
Scotia: Economic Fiscal Analysis, is available on the Internet at or by calling toll-free,

Contact: Donna MacDonald  902-424-8787

trp                        May 27, 1996 - 8:35 a.m.