Tax Cuts, Reserve Fund, and Resource Development Amid Trade War Uncertainty

Tax Cuts, Reserve Fund, and Resource Development

The Nova Scotia government has unveiled its $17.6 billion budget for the 2025-26 fiscal year, featuring significant tax cuts and a reserve fund to counter potential U.S. tariffs. Finance Minister John Lohr presented the budget, forecasting a $697.5 million deficit, which could increase if the $200 million reserve fund is utilized.

The budget acknowledges the looming threat of U.S. tariffs and the resulting economic uncertainty. To mitigate these risks, the government proposes a range of solutions, including tax reductions and increased capital spending.

# Tax Cuts and Economic Stimulus

The budget outlines $500 million in tax measures, including a 1% reduction in the harmonized sales tax (HST) to 14%, indexation of tax brackets, and an increase in the basic personal amount exempt from provincial income tax. These measures are projected to save the average household over $1,000 annually.

Furthermore, the budget eliminates parking fees at all provincial hospitals and removes tolls from the Halifax Harbour bridges, incurring revenue losses of $19 million and $39 million, respectively.

# Resource Development and Energy Policy

In response to potential U.S. tariffs, the government plans to diversify the economy by focusing on critical minerals, wind power, and hydrogen. Additionally, the budget proposes lifting existing bans on uranium exploration and hydraulic fracking of fossil fuels, aiming to increase the province's self-reliance and economic resilience.

This shift in energy policy has drawn criticism from the opposition, questioning the lack of market interest and the absence of a clear plan for these projects.

# Healthcare and Education Investments

The budget allocates nearly $6 billion for healthcare, representing an 8% increase from the previous year. This includes $1.4 billion for capital costs and hospital expansions, along with $26.9 million for shingles vaccinations for seniors.

The budget also confirms a campaign promise to increase the minimum wage to $16.50 per hour and allocates an additional $61.3 million to expand the school lunch program to 77 more schools.

# Concerns and Criticisms

The projected deficit and the potential need to utilize the reserve fund have raised concerns about the province's financial stability. The opposition has criticized the lack of clarity regarding the purpose of the reserve fund and the absence of support measures for workers potentially affected by the trade war.

Overall, the Nova Scotia budget 2025-26 presents a mix of tax cuts, economic stimulus measures, and resource development initiatives. However, concerns remain regarding the potential impact of U.S. tariffs and the long-term sustainability of the proposed policies.