Nfld. & Labrador

So long, deficit reduction levy: N.L. taxpayers get a break after Dec. 31

There's three weeks left to 2019, and three weeks left for a controversial tax the province says helped save it from the brink.

Controversial tax will be gone, finance minister guarantees

The temporary deficit reduction levy will be gone in 2020, says Finance Minister Tom Osborne. (Joe Raedle/Getty Images)

As 2019 fades into the past, so too will a controversial tax that brought Newfoundlanders and Labradorians to the street in protest.

It's been nearly four years since the temporary deficit reduction levy — commonly known as "the levy" — was thrust upon citizens with little warning.

It was part of the money-earning measures brought in by the Liberal government after Dwight Ball was elected premier, and something that prompted an outcry.

"It was a necessary evil," current Finance Minister Tom Osborne told CBC Newfoundland Morning. 

"I was one of the people in the province who disliked the levy. I wish it never had to be in place. But I guess in December of 2015, the province was in a very difficult situation."

After winning the November 2015 election, the Liberals repeatedly said the fiscal situation was much worse than the previous Progressive Conservative government had let on. There were concerns about making payroll.

The levy was implemented for taxpayers earning $50,000 or more annually. It ranged from $100 to $1,800 for people earning more than $601,000.

There are still financial troubles, but goals can be accomplished without the levy, says Osborne. (CBC)

Osborne said it affected about 23 per cent of the province's taxpayers. He credited it with playing a part in reducing the province's annual deficit from $2 billion annually to about $600 million.

"The province still has some challenges ahead but we're in much, much, much better shape," he said. "We're able to do without the levy at this particular point."

Credit ratings have stabilized, but ratings agencies are still calling on government to find more savings. Osborne is no longer promising to have a balanced budget by 2023.

Economists have tossed around the possibility of insolvency within the next five to 10 years, but Osborne said it's not in the cards.

The finance minister lays much of the blame at the feet of the previous government — which he was a part of, before crossing the floor in 2013.

"If I could wave the magic wand and make Muskrat Falls disappear, our province would be in great shape today."

Meanwhile, Osborne said the province is close to a deal with the federal government on rate mitigation measures.

He expects an update in the next six weeks.

Read more from CBC Newfoundland and Labrador

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