News Release Archive


"Despite efforts to offer modifications, exceptions and
exemptions, the current Provincial Sales Tax (PST) system is a
roadblock in the effort to create jobs. It taxes both businesses
and their customers. It means businesses here in Nova Scotia have
higher costs than their competitors in Ontario, Alberta, Ireland
or France. It means lost sales by our seaweed producers, our
environmental engineers and our tourist operators.

Eliminating the PST offers Nova Scotia a chance to lower business
costs, improve our competitive position with the rest of Canada
and the world. It offers our businesses a chance to gain more
customers and create more jobs. Canada's other sales tax system,
the Goods and Services Tax (GST), only taxes the final customer.
Most businesses are able to get the tax they pay back through
refundable input tax credits.

But, eliminating the PST also means the government loses $750
million dollars in revenue. That's about one-sixth of the revenue
needed for health care, education, social assistance and other
government programs. The solution has been to harmonize the sales
tax systems. To use just one system that lowers  business costs
and makes our businesses more competitive; one that still raises
money for needed government programs.

In theory the Harmonized Sales Tax (HST) will do all of that, but
in practice the amount of revenue raised falls short. Estimates
show the HST will raise about $120 million less than the existing
PST system. That will be good for the economy because that money
will be spent on new investment or passed on to customers in the
form of lower prices. Eventually, new economic growth will
replace the lost revenue. But, the government was left with a
dilemma. How could it manage to pay for services while it waited
for the economy to grow?

The Government of Canada has come up with the answer. It will
cover the losses in the early years so Nova Scotia can afford
this huge annual tax reduction. The payment is for $249 million
dollars. The money was received last fall, and is being used over
the next few years to keep the budget in balance.

The result is a sales tax system that is significantly simpler. 
Including income tax cuts on July 1, 1997, the Low Income Tax
Reduction Program and the Direct Assistance Program, it will also
be better for consumers and the economy."


Contact: Bruce Cameron  902-424-8787

trp                    Mar. 26, 1997 - 8:55 a.m.