The provincial Liberals promised they wouldn’t pull the usual trick of new governments and say upon looking at the books the finances are much worse than expected. They haven’t, in so many words. But they are getting that point across in their own way.
As the government gets set for a fiscal update, scheduled for today, Finance Minister Diana Whalen has already warned that the gloomier-than-expected picture means the province likely won’t be able to afford a reduction of the harmonized sales tax, as the former NDP government had promised.
In the budget before its defeat in October, the NDP said they would reduce the HST by two percentage points over two years, beginning next year, which would bring the tax down to 13 per cent. That was follow-up to raising the tax by the same amount early in their mandate to help make ends meet in a slow economy.
The Liberals had hinted at this before, to their credit saying they would make no promises on the decrease. On Tuesday, Whalen reiterated the concern, saying the province can’t afford to lose about $190 million in revenue for each percentage point cut in the HST.
As nice as a tiny break would have been for consumers, such pledges shouldn’t be made lightly. In the election campaign, Conservative leader Jamie Baillie, desperate to improve his party’s fortunes, said he would lower the tax and also balance the budget.
The NDP should feel complimented – in a back-handed way. The Liberals’ indication that the province could not afford to give up the revenue lends credibility to the NDP’s move to raise it in the first place.
Whalen is also saying the NDP’s forecasts for revenue were overstated – to which the NDP interim leader Maureen MacDonald responds that their projections at below two per cent in growth were indeed modest.
Doubtless such a tax-cut goal will be pursued by the Liberals, since it would come off as good news. Nova Scotians might be lucky enough to see it before the next election.