Nfld. & Labrador

No tax increases planned for next budget, Cathy Bennett says

The finance minister is promising the big tax increases in this year's budget won't be repeated in 2017, adding there's more information coming about the increased gas tax.

Finance minister hints that changes could come to the gas tax in fall fiscal update

Finance Minister Cathy Bennett says no hikes to income or corporate taxes are planned for next year's budget. (Bruce Tilley/CBC)

Newfoundland and Labrador's finance minister is promising the big tax increases in this year's budget won't be repeated in 2017, adding there will be more information coming soon on the doubled gas tax.

In a speech to the Canadian Tax Foundation on Friday, Cathy Bennett said she's not planning more tax hikes.

"I can say that it is not our plan to increase corporate or personal income tax in budget 2017," she told the gathering of lawyers, accountants, academics and other tax professionals in St. John's.

The widely-criticized first budget for the new Liberal government included increases to personal and corporate income tax. Budget 2016 hiked the HST by two points and had hundreds of fee increases.

Bennett said Monday the province didn't want to make further changes to the income tax system until after a complete review.

'It's really early days'

The federal government is in the middle of reviewing its tax structure and Bennett said the provincial review will come after that, likely some time next summer.

We've made a commitment to continue to review and monitor the gas tax and that's exactly what we've been doing.- Cathy Bennett

When asked about further increases to other fees or sales tax, Bennett said wasn't as firm.

"We're going through the budget work now for next year, it's really early days and it's a number of months before we have to present the budget," she said.

"We have to get to the fall fiscal update first, and we'll be making those decisions based on assessments into the fall."

Government calculated the average household would pay an extra $3,000 a year because of changes in the budget, although later the controversial deficit reduction levy was reduced for lower income earners.

In total those changes will bring in an extra $882 million a year for the government as it struggles with a deficit around $1.8 billion.

'More clarity' on gas tax coming

Earlier this year, the province doubled its tax on gasoline, adding an extra 16.5 cents a litre. Bennett promised at the time that as oil prices rise the gas tax will go down.

Tracking by the finance department shows oil prices are higher than budgeted, giving the province more revenue and more flexibility.

Tracking by the department of finance shows that oil prices have been higher than the province budgeted for in April. (NL Department of Finance)

Bennett hinted changes to the tax could be coming later this month, but said a final decision hasn't been made.

"We'll look to make an announcement and provide more clarity when we get to the fiscal update, which will happen before the end of October," said Bennett.

"We've made a commitment to continue to review and monitor the gas tax and that's exactly what we've been doing," said Bennett.

With major increases in revenue off the table, the province will have to find savings in order to meet its targets to shrink the deficit.

"There's certainly a variety of things we can look at in how we gather those savings and those are the things we're going to be discussing in the session that we're having on October 11," said Bennett.

The premier is holding a meeting with business, labour, education and arts leaders on that date to test ideas that could make it into the spring budget.