ST. JOHN'S, N.L. — The provincial cover charge, otherwise known as the temporary deficit-reduction levy, netted $100 million for the provincial government in its first two years.
The levy is set to be eliminated by the end of 2019, per legislation introduced when the levy was brought in for the 2016 provincial budget.
Finance Minister Tom Osborne says he will be among the happiest to see the levy go.
“None of us wanted to see that put in place. None of us wanted to see any of the measures that were put in place. It was a very difficult time for the province, it was a difficult time for politicians to have to deal with the issues the province was facing,” said Osborne.
“That was one of the measures government put in place in order to satisfy our lending agencies and bond rating agencies in order to keep the province solvent.”
"It was a very difficult time for the province, it was a difficult time for politicians to have to deal with the issues the province was facing." — Tom Osborne
The 2016-17 revenues for the levy were $40 million, while 2017-18 saw $60 million in revenues from the levy. The first-year numbers are smaller because the levy was not collected for the full calendar year, so the $60 million reflects the typical annual yield of the levy. The total take of the levy since its introduction is therefore around $160 million over three years.
The numbers for the 2018-19 fiscal year are still being calculated, but department officials say to expect $60 million to show on the books.
The money went into the general revenues of the government and were not earmarked for any specific purpose.
When the levy was first introduced, those with taxable income of as low as $20,000 per year had to pay. In May 2016, then-federal cabinet minister Judy Foote announced deferred payments on federal loans for the province, which freed up enough money to change the threshold from a minimum taxable income of $20,000 to $50,000. As a result, 74 per cent of those initially expected to pay were taken off the hook.
Osborne says there are no plans to change the terms of the levy, and it will be eliminated at the end of the year.
Twitter: @DavidMaherNL
RELATED