A 'Pepsi tax' and a fitness break: Here's how N.L.'s new budget hits your pocketbook
No changes for most earners, but higher-income households will pay more
Newfoundland and Labrador's brand new budget will change the cost of living for many residents, but the impacts — costs and benefits — will depend on how much you earn, how you live your life, and even what beverage you like to drink.
The most significant changes in income tax will affect the highest earners.
A middle-class tax increase was avoided in this budget, as no changes in income tax are in the cards for anyone who earns $135,973 or less.
Above that, however, there will be increases, set to take effect Jan. 1.
As well, there are new tax brackets for people who earn more than $250,000 per year, with progressively higher rates for different brackets. Here's how the changes will look:
- $135,974 to $190,363: New rate of 17.8 per cent, up from 17.3.
- To $250,000: 19.9 per cent, up from 18.3.
- To $500,000: 20.8 per cent, up from 18.3.
- To $1 million: 21.3 per cent, up from 18.3.
- More than $1 million: 21.8 per cent, up from 18.3.
Finance Minister Siobhan Coady says the changes will bring in about $15.3 million in extra revenue.
The recent premier's economic recovery team report chaired by Moya Greene recommended broader tax increases. As expected, though, much of the report will be put to public consultations before any decisions are made for future budgets.
That said, the current budget does some other implications and impacts.
If you like Pepsi — or competing sugary beverages — get ready to pay more. Starting next April 1, the government will introduce a new tax of 20 cents per litre. Coady says the change will "position Newfoundland and Labrador as a leader in Canada and will help avoid future demands on the health-care system."
The government had looked at such a tax before, but considered it too complicated and costly. The budget gives the government almost a year to figure out how to execute the new tax, which it expects to bring in close to $9 million a year.
Cigarettes — a perennial target at budget time — will become more expensive. Cigarettes are going up three cents each, while fine-cut tobacco is up six cents per gram.
As another way of encouraging healthier lifestyles, the government is offering a new tax break. The physical activity tax credit will add up to $2,000 per family, as an incentive to take advantage of sports and other recreation activities. Coady said the $7-million program is also intended to support "the local health and wellness industry."
If you are planning on attending Memorial University in the years ahead, get ready to pay more — with increasing fees in years down the road. Coady said government support that has kept tuition fees frozen for more than two decades is being phased out over the next five years. (Memorial president Vianne Timmons has said currently enrolled students will not pay more while they complete their programs.)
While the government did not address what's often called "the tampon tax" — that is, sales taxes on hygiene products — it will spend $30,000 on sanitary products at schools for students who need them.
While the government is expecting to draw hundreds of millions of dollars in revenue from offshore oil, it is also promoting the conversion to electric vehicles. About $500,000 is being put aside for incentives for people to switch to EVs, with a rebate of $2,500 being offered with each purchase.
As well, the government is putting aside $1 million for homeowners who heat their houses exclusively with oil. A rebate of $2,500 will be available for each retrofit.
With files from Katie Breen