Nova Scotia

New non-resident tax measures could stifle some business proposals in N.S.

Fallout from the provincial government’s new taxes on seasonal residents continues, with several businesses reassessing their development plans in Nova Scotia.

Provincial budget includes new non-resident deed transfer and property taxes

One of the new houses under construction at Fox Harb'r Resort. Officials with the resort are expressing concern about the new non-resident property tax introduced by the Nova Scotia government. (Fox Harb'r Resort)

Fallout from the provincial government's new taxes on seasonal residents continues, with several businesses reassessing their development plans in Nova Scotia.

As part of its first budget, the Tory government passed a new five per cent deed transfer tax and two per cent property tax last week to be applied to properties owned by people who are not full-time residents. The plan was part of the Tory election platform.

For Fred Stanford, the measure could spell the end of a development he wanted to pursue in Lunenburg.

Like many Nova Scotians, Stanford, CEO and director of Rhyolite Resources, left the province following university to pursue work. After a 40-year career in the mining industry, he is looking for a place to build a plant to manufacture new technology he's designed.

Feeling rejected by home

The plan was to do that in Lunenburg, where he would also offer training programs. Stanford, who owns a home in Lunenburg, said he expects the venture would create about 100 jobs. To help with housing, Stanford also wanted to build lodging along with his plant.

There were challenges to pursuing the venture in Nova Scotia, but it was something Stanford felt strongly about, he said. The new tax measures have likely changed those plans.

"It's easier to put it where there are larger ecosystems to support it," he said in a recent interview.

"But I was willing to put in the extra effort to create that ecosystem. But if I'm not a Nova Scotian and my province has rejected me and some of the others like me who are just trying to come home, then to hell with it."

Reassessing plans

Officials at Fox Harb'r Resort on the Northumberland Shore are also taking a second look at expansion plans.

Kevin Toth, president of the resort, said about 20 per cent of the 100 residential properties there are owned by seasonal residents. With a $10-million development to build seven homes underway, Toth said the expectation was some of those would go to people who live elsewhere.

Then the tax measures were introduced.

"Already we've had a couple of high-level prospects that have gone cold," he said in an interview. "They are not interested in having to pay this annual two per cent tax."

It's the property tax that's the bigger concern for Toth, who thinks it will make it more difficult to attract investment in the province.

Changing explanations

The resort has started planning for a golf course expansion and 48-unit development that includes townhouses, homes and lots. Toth said those plans are now being revisited in light of the new tax measures.

"I'm not saying that the plans are going to be shuttered at all, but this new tax certainly causes us pause and reevaluation, like any good business would do."

At a minimum, Toth said he'd like to see the government revisit the rate and consider lowering it. Like the dozens of people who presented to the legislature's law amendments committee on the matter, Toth said he doesn't think the government fully considered the contributions seasonal residents make to the province, especially in rural communities.

"I would have hoped that the province would have undertaken a study to see if it's actually going to contribute to our economy."

When the budget was tabled, Finance Minister Allan MacMaster presented the new taxes as a way to help the province's housing crisis and potentially free up stock. He later conceded the government did not know if the measures would actually work.

Considering other locations

Premier Tim Houston, meanwhile, began framing the taxes as a way to fund a new tax cut for people younger than 30 working in the trades and a way to generate revenue at a time when the province has a $500-million deficit.

Economic Development Minister Susan Corkum-Greek met with Stanford on Monday to discuss his concerns. She would not do an interview, but in a statement said the goal of the new tax measures "is not to impede economic development, but is about helping more people secure affordable housing in the province."

Stanford, meanwhile, is scheduled to discuss his proposal this week with officials from the government of Ontario. Sudbury is a particular hotbed for the mining industry.

"At the end of the day, it will come down to whichever one is the best business case."

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