Minimum wage going up, gas tax going down: N.L. announces new measures for cost-of-living relief

·5 min read
The Newfoundland and Labrador government says it will temporary cut the provincial gasoline and diesel tax. (Danny Arsenault/CBC - image credit)
The Newfoundland and Labrador government says it will temporary cut the provincial gasoline and diesel tax. (Danny Arsenault/CBC - image credit)
Danny Arsenault/CBC
Danny Arsenault/CBC

The Newfoundland and Labrador government is introducing a series of financial measures that it says will ease pain at the gas pump and put money in the pockets of residents.

The province is introducing a temporary 50 per cent reduction on its gasoline and diesel tax, Finance Minister Siobhan Coady announced Thursday. The move will cut the provincial gas tax — currently 14.5 cents per litre — by seven cents per litre until the beginning of 2023. When HST is factored in the price of gas and diesel will drop by 8.05 cents per litre.

The price of gasoline sits at around $2.22 per litre on the Avalon Peninsula but is as high as $2.47 per litre in parts of Labrador, while diesel ranges from $2.25 in Newfoundland to near $3 per litre in Labrador.

The reduction won't take effect until it's passed in the House of Assembly. Premier Andrew Furey said it will be introduced in the legislature on Monday.

"I know these are stressful times for many of you and your families. We've been working tirelessly to find ways to add further assistance that are both within our means and are meaningful to you," he said Thursday.

Furey said cutting the gas tax was previously impossible due to how the federal carbon tax's application in Newfoundland and Labrador was negotiated with the federal government.

CBC
CBC

The federal government likely would have implemented a "backstop" if the province had changed the gas tax, Furey said earlier this month — imposing further carbon taxes on goods that are currently tax-exempt.

Furey said Thursday that stance has changed in recent conversations with Ottawa, adding it came up during a meeting with Prime Minister Justin Trudeau last week when Trudeau was in Newfoundland for the royal visit.

"The federal government recognizes that cost of living is a significant issue facing all Canadians, and this is one measure that we're taking right now to help address that. And I'm confident, subsequent to those conversations, that the backstop will not be implemented," Furey said.

The province will also introduce a one-time home heating supplement for families heating their homes with furnace oil. Families with a net household income under $100,000 will receive a one-time payment of $500, while families with an income of between $100,000 and $150,000 will get a partial payment of between $200 and $500.

People will need to apply for the rebate, said Coady, and more information will be available in the coming weeks.

Interim PC Leader David Brazil said his party had been calling for some of what was announced Thursday for months.

He said any move to address the cost of living is a positive one but he wanted to see more long-term solutions.

"Eight cents off is welcome, but if it goes up 10 cents tomorrow that's really not helping anybody in this province get further ahead," Brazil said.

Minimum wage rising to $15 by end of 2023

The province also announced it will raise the minimum wage in increments to $15 per hour by 2023. The current minimum wage is $13.20 per hour.

Labour Minister Bernard Davis said the province will make three changes to minimum wage in the next 16 months: a 50-cent increase on Oct. 1, an 80-cent increase on April 1, and the final 50-cent increase in October 2023.

The province will also implement a transitional support program for smaller employers as the minimum wage rises, providing 50 cents an hour, per employee, for employers with 20 or fewer employees.

Davis said the recommendations on addressing the minimum wage came from a report from the province's minimum wage review committee, which was established in January to address the minimum wage and its adjustment process.

The announcement has been years in the making for Mark Nichols and groups like $15 and Fairness, who have pressed the government to make the minimum wage a livable wage.

And although Nichols says $15 isn't a livable wage — estimated in a 2019 report to be around $18.80 per hour — it's a positive starting point.

"There's still work to be done to bridge the gap between this new minimum wage and a living wage, but it is certainly moving the needle in the right direction," said Nichols, who also served as an employee representative on the minimum wage review committee.

Danny Arsenault/CBC
Danny Arsenault/CBC

Nichols says there is still more for the provincial government can do, including connecting the minimum wage adjustment process to the consumer price index and examining the threshold for eligibility in government programs as the wage goes up.

"What we don't want to happen is increase minimum wage to a point where someone loses access to a program like say the prescription drug program … and have to choose between work and the program."

Interim NDP Leader Jim Dinn called the increase to minimum wage significant but wondered if it will be enough if inflation continues to raise the cost of goods.

"By the time we reach 15 an hour, you have to ask yourself the question, what's going to be the cost of living? Will that even be sufficient?" he said. "We still have a ways to go."

The provincial government says the measures announced Thursday will cost around $80 million, and is on top of $142 million in previous cost of living measures announced in the 2022 provincial budget.

Coady said the province should have the additional revenue to make the funding possible, thanks to the price of oil being higher than projected. She said the deficit is still anticipated to be $351 million.

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