HST to increase by 2 percentage points in budget

No surprise, as audited statements confirm N.L. deficit hike
No surprise, as audited statements confirm N.L. deficit hike

The cash-strapped Newfoundland and Labrador government will increase the harmonized sales tax in Thursday's budget, as one measure to offset a severe drop in oil revenues, CBC News has learned.

The increase will be two percentage points, which means the HST will jump from 13 per cent to 15 per cent.

The government will also expand the HST rebate for low-income earners to lessen the impact, sources say.

- CBC NL will have live coverage of Thurday's budget on TV, radio and online starting at 2 p.m. NT

On Wednesday, the governing Tories also laid out plans of how some of the provincial portion of the HST will be directed to municipalities and local service districts to make them more sustainable.

The budget also will include an income tax increase for high-income earners.

However, even with the new revenue streams the government is expected to project a deficit of close to $1 billion.

Pre-budget announcements

Thursday's budget comes in the wake of three pre-budget announcements this week which saw government committing to a five-year attrition plan, announcing 360 new long-term care beds in privately-run facilities, and a new tax and revenue-sharing deal with the province's municipalities.

On Monday, Finance Minister Ross Wiseman announced government would be removing 1,420 public service positions through a period of five years.

The plan would see the positions gradually phased out through retirements and other means of attrition, with what Wiseman said would be "minimal impact" on services. However, during Monday's announcement, Wiseman could not rule out the possibility of some layoffs.

Then on Tuesday, a second pre-budget announcement was made, with Paul Davis laying out a strategy for a bigger role for private and non-profit sectors in running long-term care services in the province.

The plan will see the construction of four new long-term care facilities, which will hold 360 new beds. The government will provide funding for the facilities, however private entities will step in to build and operate them.

Davis and Health Minister Steve Kent touted the move as an innovative and financially efficient way to deliver long-term care to a growing demographic of aging citizens.

The third pre-budget announcement came on Wednesday, with Davis committing the government to a new financial relationship with the province's cities and towns.

The deal would see the provincial government begin to rebate part of the provincial portion of the HST to towns, based on what they pay for goods and services. The plan would also see government sharing tax revenues with municipalities.