News Release Archive


Tax breaks for libraries, rebates for new home construction and
full tax refunds for most businesses are among the benefits of
the new sales tax system unveiled today by Finance Minister Bill

"The new tax is a win-win for Nova Scotia," said Dr. Gillis.
"Government will collect $100 million less in taxes, and in
addition Nova Scotians will receive $53 million in income tax
breaks and targeted help. That means more money in the hands of
Nova Scotians, more money in the economy and more jobs."

The new tax system jumps and sustains the Gross Domestic Product
by point eight (0.8) per cent. That translates into 3,000 new
jobs over the next few years, he said.

A key feature of the new 15 per cent Harmonized Sales Tax (HST)
will be an increase in tax refunds to businesses operating in
Nova Scotia. Most businesses will receive full tax refunds,
called Input Tax Credits, on the new harmonized sales tax, not
just on the federal portion. This means a significant boost for
construction, exports, tourism, hi-tech and many other business

The minister said businesses in Nova Scotia will experience many
competitive advantages under the new system. With full Input Tax
Credits, operating costs on everything from phone bills to
computers will come down. Many other business expenses will be
lower including hotels, meeting costs and meals.

"It all adds up to huge made-in-Nova-Scotia advantage. This gives
our local companies a reason to expand and grow, and it gives
businesses from away excellent reasons to locate in Nova Scotia,"
said Mr. Gillis.

For consumers a major benefit is the requirement for stores to
show prices with the tax included. A recent poll conducted for
the Department of Finance shows 73 per cent of Nova Scotians
prefer to have pricing that includes the tax. Dr. Gillis said
"For the first time in Nova Scotia the price on the tag will be
the price you pay. This will give Nova Scotians the power to
compare prices on an even playing field."

The new tax system is the result of an extensive consultation
involving more than 80 meetings with business and other
organizations over the past five months. The groups ranged from
the Forest Products Association to the Retail Council of Canada
to the Nova Scotia Exhibition Association and the Nova Scotia
Medical Society. A number of new measures resulted:

- The price of books will not increase under the new system.
  Books will only be subject to the present 7% tax rate, not the
  new 15% rate. In a related move by the federal government,
  Finance Minister Paul Martin announced that public school,
  college and university libraries will also get 100% of the HST
  back. Books for these institutions will be sales tax free and
  will cost less effective immediately.

- In Nova Scotia there will be a housing rebate for all buyers of
  newly constructed homes. New homes under $150,000 will be
  eligible for a combined 27% rebate of the harmonized sales tax.
  "Coupled with decreased building material costs this will
  ensure that new homes cost the same or less on April 1," said
  Mr. Gillis.

- The government has also implemented a number of measures to
  further put money back into the economy. All Nova Scotians will
  receive a 3.4 per cent provincial income tax reduction. This is
  the first cut in personal income tax in the history of
  province. Low income earners will receive a second tax break,
  an enhanced low income tax reduction program. In addition the
  government has set aside $8 million to further assist low
  income earners.

Dr. Gillis said the government has identified a number of issues
that will be addressed, including rebates of tax on the purchase
or conversion of vehicles for the disabled, before the tax system
comes into place on April 1, 1997. The government's intention is
to consult further and announce new measures before that date.

"This is a competitive deal -- and we say that with hope for the
future. This package will create jobs, grow the economy and make
Nova Scotia an even better place in which to live," the minister


Contact: Bruce Cameron  902-424-8787

                     BACKGROUND INFORMATION



*  Removing the PST will mean tens of millions in savings every
   year to the construction industry. It will result in lower
   costs of building office towers, retail stores, industrial
   manufacturing plants and municipal infrastructure such as
   sewer and water lines.

*  Building everything from houses to roads to factories will
   cost less because the construction industry will be relieved
   of tax on its business inputs.

*  In Nova Scotia, special tax rebates for buyers of newly built
   homes will protect the housing industry.

Commercial Cultural Industries and Entertainment:

*  The tax on tickets for commercial productions -- movies,
   concerts and sporting events -- goes down from 17.7% to 15%,
   as the 10.7% Amusement Tax disappears.

*  Full tax refunds (ie: Input Tax Credits) are particularly
   important for the creators of movies, music and commercial
   theatre. This sector currently has particularly high PST
   costs. On April 1, 1997, they will have lower costs on vehicle
   rentals, equipment rentals, computers, meals, and

*  Not-for-profit associations (under $50,000) will not be
   required to collect the new HST.


*  Exports from Canada will become completely tax free. Exports
   to the rest of the country will become much more competitive.

*  Input Tax Credits, particularly for our service sector, will
   make Nova Scotia an increasingly competitive force in the
   national and international marketplace.

Grocery Stores:

*  Consumers will be paying less -- both in prices and taxes
   -- at the grocery store.

*  Basic foods will continue to be tax free. Other grocery store
   items such as toothpaste, light bulbs and cleaning supplies
   will be taxed at 15 % instead of 18.8%.

*  Hidden taxes will be removed at each level of the production
   chain, from farmer to store shelf.


*  Sales are expected to increase since the combined tax to
   consumers will be lower (15%) than the current level of 18.8%.

*  Business customers will be able to get a significant amount of
   the sales tax back, as an Input Tax Credit, which should mean
   a substantial increase in meals sold.


*  Tourists from outside Canada will get back all taxes paid on
   accommodations and goods they take back home. This translates
   into additional demand for tourism-related products and
   services -- and new jobs.

*  Tourism operators will all benefit from full tax refunds on
   goods and services purchased for use in their business.

Agriculture, the Fishery, Forestry and Mining:

*  Full tax refunds will mean significant savings for these key
   resource areas, allowing our goods to be even more competitive
   -- contributing further to our important and growing export

*  Dealing with one tax system will reduce paperwork and red
   tape, also reducing the cost of doing business.

*  Reduced costs may result in lower prices to consumers creating
   additional demand for products.

Automobile repairs and purchases:

*  The tax on automobile parts and labour goes down from 18.8% to
   15%, making repairs less expensive.

*  The tax on existing and new leases goes down on April 1, 1997.

*  The tax on new vehicles goes down in stages. On April 1, 1997,
   the HST will be 15% plus a 2% provincial tax. On April 1,
   1998, the provincial tax goes down to 1% and is eliminated on
   April 1, 1999.


*  Consumer polls show 73% of Nova Scotians want their prices
   displayed tax-included.

*  Businesses serving consumers must show their prices tax
   included. Prices must be converted by April 8, 1997.

*  Cash register receipts may show the price tax out with 15%
   added at the end as is the current practice.

Financial Services:

*  Financial institutions such as banks and life insurance
   companies will pay a 15% HST on their purchases. They will not
   get a full refund of the sales tax they pay.

*  New rules have been developed for financial services ensure
   fair and equal treatment to all Canadian financial
   institutions. There will be no advantage or disadvantage for
   these institutions to buy goods and services either inside or
   outside the participating provinces.

Non-profit and public sector entities:

*  Last spring, for public service bodies other than charities
   and public institutions, the small supplier threshold was
   raised to $50,000 in annual taxable sales from $30,000.

*  Public sector entities under $50,000 are not required to be
   registered for the new sales tax. They don't collect taxes on
   their sales and are not eligible for tax refunds.

*  Rebate application requirements for non-registered public
   service bodies will be streamlined, reducing the cost and
   complexity of administration and compliance for a large number
   of smaller public service bodies.




                   Expansion of the Tax Base

*  Businesses, including those who provide services, pay tax on
   the goods and services they purchase to operate their
   business. Under the current provincial retail sales tax
   system, the PST is a cost of doing business and is hidden in
   the final price of all goods and services sold in the
   provinces. The new system will eliminate the PST and the
   Amusement Tax and the tax on electricity.

*  Items to which the GST does not apply, such as basic
   groceries, rent, purchase and sale of used housing, health
   care and prescription drugs, will continue to be exempt under
   the new system. This, together with the overall rate reduction
   and the elimination of hidden taxes, means that the expansion
   of the base will not increase the amount of tax paid in the
   harmonizing provinces. In fact, total sales tax burdens will
   fall. In Nova Scotia, $100 million less will be collected in
   sales tax every year.

                         Tax-Included Pricing

*  Consumers have expressed a strong preference for tax-included
   pricing. 73 per cent of Nova Scotians polled by Corporate
   Research Associates said that they prefer tax-included

*  Receipts and invoices will disclose either the amount of tax
   paid or the rate at which tax has been charged. Many cash
   register tapes can be pre-stamped with a simple statement that
   15% tax has been added. Retailers must show the tax-included
   price but may, in addition, show the tax-excluded price. The
   tax may be added at the end as is the current practice.

               Goods/Services Sold Into Nova Scotia

*  The combined sales tax system will ensure that goods and
   services sold into Nova Scotia from outside the province are
   subject to the same 15% tax rate as goods or services sold
   within the province.

*  All Canadian businesses that are registered for the GST will
   be required to collect and remit the HST on taxable goods they
   ship into Nova Scotia or taxable services they perform in Nova

*  Most businesses registered for the GST will be eligible for a
   full refund of the 15% harmonized tax they pay on goods and
   services used to conduct their business.

                Goods/Services Sold From Nova Scotia

*  The new sales tax system will require businesses in Nova
   Scotia to charge 7% tax, not the new 15% tax to their
   customers outside of the harmonizing provinces. Eg. To P.E.I,
   Quebec, Ontario, etc.

*  Exports from Nova Scotia, outside of Canada, will continue to
   be zero-rated and thus free of HST.

                   Exemptions, Rebates and Credits


*  Nova Scotia will provide a rebate on new home construction.
   The rebate will be 18.75% of the provincial portion of the tax
   paid on the purchase of the newly built home.

*  The full rebate will apply to all new homes occupied as a
   principal residence, up to a limit of $150,000. The rebate
   will be frozen at $2,250. The provincial rebate will be added
   to the current federal rebate.

*  Under this combined program, approximately 27% of the total
   tax will be refunded for 87% of the new homes constructed in
   the province. The government is setting aside $6.5 million for
   this program. This will ensure that new homes do not increase
   in price as a result of the new sales tax.


*  In Nova Scotia, New Brunswick and Newfoundland, there will be
   no tax increase for the purchase of books. Books will be
   subject to a point of sale rebate of 8%.

*  In addition, the federal government has announced a GST rebate
   on books for schools, universities, and municipalities across
   the country (which includes most public libraries) and certain
   charities which promote literacy.


*  Tourists from outside Canada will be able to get back all tax
   they pay on accommodation and goods they bring back home. Nova
   Scotia is working with the tourism industry to design a system
   that makes refunds work quickly and efficiently for tourists
   leaving the country.

Fire Services

*  Fire trucks will be eligible for rebates so that the price
   does not increase as a result of the new sales tax.

Municipalities-Universities-Schools-Hospitals (MUSH) Rebates

*  The present system of GST rebates for this sector will apply
   to the full 15% HST.

Provincial Income Tax Cuts

*  The Nova Scotia government, in a separate move, is also
   providing the first ever cut in personal income taxes,
   effective July 1, 1997. This is a cut of 3.4 % in the
   provincial rate.

*  There are also extra income tax breaks for low income Nova
   Scotians: an enhanced low income tax reduction program and an
   $8 million program of special assistance to Nova Scotians who
   do not pay income tax.

                 Administering the New Sales Tax

*  The new sales tax will be initially administered by Revenue
   Canada. There will be a new joint federal/provincial border
   and revenue agency. The new agency should be up and running by
   January 1, 1998.

*  There will be no layoffs at the Provincial Tax Commission as a
   result of harmonization. Revenue Canada has committed to take
   on 70 positions now. In addition, ongoing provincial needs for
   fuel, tobacco and other tax administration, coupled with 
   natural attrition and early retirement, will ensure that there
   are no layoffs.

                    Recovery of Tax by Businesses

*  The present GST system will be maintained. The current GST
   input tax credit rules will apply to the new harmonized tax.
   All registrants, both inside and outside of the harmonizing
   provinces, will be entitled to claim credits for tax paid at
   either the 7 or 15 per cent rate on goods and services they
   acquire for the operation of their business. In addition,
   rebates will apply in some cases where input tax credits are
   not available.

*  Under the harmonized sales tax, the reporting requirements
   will be the same. This will include the rules for remittance
   of tax, returns, fiscal periods and reporting periods.

For more information:  1-800-731-7707



trp                   Oct. 23, 1996 - 4:25 p.m.