HALIFAX – Premier Stephen McNeil said Thursday he intends to approach Ottawa about removing Nova Scotia’s portion of the harmonized sales tax that is charged on top of the tax drivers pay for gas in his province.
With the province’s regulated gas prices soaring, McNeil said he would like to give consumers a break at the pumps but the idea needs the backing of the federal government.
“We’ll need to have some support at the national level because of course it means forgoing some tax on their part as well,” McNeil said.
McNeil said he would also like to see the other Maritime provinces on board as that would make it easier for Ottawa to open up its HST agreements.
“When they open up that agreement, I’m sure they’ll want to open it up once as opposed to opening it up three different times,” he said.
He said he will raise the issue when the Atlantic premiers meet in Saint John, N.B., in May.
McNeil said while his government could use the revenue, he believes the tax on tax is unfair to consumers.
“All Nova Scotians by whatever measurement you would use would consider it not fair,” he said, adding that removing the province’s portion of HST on the gas tax would save Nova Scotia drivers about four cents per litre.
However, Finance Minister Diana Whalen said any HST savings could only be realized when the government tables a balanced budget, expected within three to four years.
“It would be really irresponsible to start rebating taxes or changing our tax system in a way that would just put us deeper in a hole,” said Whalen.
She said she thinks it’s a good idea to start the discussions on the gas tax now in order to signal where the province wants to go, but she warned any change will take time, given that other governments will likely have to agree.
“We are going to be doing our darndest to do that even faster if we can, but I’ve got to tell people it’s a very big mountain to climb,” she said.
Progressive Conservative Leader Jamie Baillie said the province’s drivers are in need of relief now and the government should act immediately on a tax he says his “morally wrong.”
He said until an agreement is in place the province should reduce its motive fuel tax by at least the amount collected in HST.
“I know the government defends the tax on tax because they need the money,” said Baillie. “But if it’s wrong, it’s wrong.”
The Finance Department said the province currently generates $250 million through its motive fuel tax and it estimated a cut to the provincial portion of the HST would be as high as $25 million.