PCs, Liberals try to set themselves apart on tax policy during campaign's first week

Two of Nova Scotia's major political parties are betting big that tax cuts will attract voters, with announcements from the Liberals and Progressive Conservatives during the first week of the campaign.

Although there are similarities in what the two parties are pitching, there are also some key differences.

PC Leader Tim Houston launched his party's approach for tax relief a few days before triggering the early election, when he announced plans to reduce the HST by one percentage point beginning next April.

The percentage point would cost the government about $260 million and Houston said earlier this week that it would save people about $250 a year.

"That's real money that people can spend on things that matter the most to them," he told reporters.

The PCs also announced that, if re-elected, they would increase the basic personal exemption on provincial income taxes from $8,744 to $11,744, although people making less than $25,000 already benefit from almost that level of exemption due to a change made by a previous Liberal government.

The change would cost $110 million.

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Houston's party would raise the minimum wage to $16.50 in one year if they get back into government. The minimum wage is currently $15.20. The PC leader said raising the minimum wage won't solve all the challenges people face, but it is an "investment in dignity for people."

"This is how we help workers catch up. In big ways and small, we're putting dollars in people's pockets by helping them earn more at work and keep more of what they earn."

The Tories say their tax measures would save on average $850 per household. They also point to steps they took during their first mandate, including indexing income tax brackets and income assistance payments to the rate of inflation and the introduction of a school lunch program as additional steps that save people money.

The other major tax-related announcement from the PCs so far this campaign is the promise to remove the tolls from the Halifax harbour bridges. Houston said that would cost about $40 million a year, while saving commuters money and time.

Some experts, however, argue that removing tolls might lead to more congestion on the bridges instead of less.

At the time Houston announced his plan to reduce the HST, he said the province could afford his cut, but not the two-percentage-point cut Liberal Leader Zach Churchill promised back in February.

Churchill disagreed then and he disagreed again on Thursday when he reaffirmed his commitment to that HST cut and announced further tax cut measures of his own. He said what Houston is promising amounts to "half measures."

Along with the HST reduction, the Liberals are promising to raise the basic personal exemption to $15,705 and double the basic personal amount adjustment for people who earn less than $75,000.

Those measures, combined with another promise earlier this week to remove the HST from remaining grocery items still subject to that tax, would save families on average $3,000 a year, said Churchill.

"That can cover power bills, that can help families put their kids in hockey, in ballet. It will help put more food on the table."

A critique of cuts to the HST — whether it's one percentage point or more — is that it does not help the most financially vulnerable people in the province because the cut benefits people who can afford to spend more money.

Churchill said that while there are government programs intended to help the poorest people in Nova Scotia, there is another segment of the population that continues to fall further behind.

"There is working poor now in Nova Scotia. There's families that are bringing in two incomes who don't have enough money to put food on the table, who don't have enough money to pay bills, who are paying some of the highest rents in the country."

Churchill's promises do not come cheap.

Documents from the Liberals say the HST promise would cost $542.3 million. The basic personal rate increase would cost $348 million and the basic personal adjustment would cost $55 million.

The Liberal leader argues that the province can afford the tax relief if the government sticks to its own budget. He pointed to the fact that the Tories spent more than $1 billion a year outside of their own budget during each of their first two years in office. At last update, they spent almost $450 million outside their own budget this fiscal year before the election call.

There is a potential risk to this view, however.

Although Houston and the Tories have indeed benefited from a windfall during their time in office thanks to record population growth driving record government revenues, recent Finance Department projections suggest population growth could be slowing. If it does, it could mean the days of favourable revenue surprises the PCs have taken advantage of won't be there for the next government.

NDP Leader Claudia Chender has yet to release any tax policy this campaign, but she has previously advocated for removing the HST from all grocery items still subject to the harmonized sales tax.

On Thursday, Chender told reporters that the only people for whom a reduction in the HST is meaningful are "people with enough disposable income to buy really expensive things."

"It's the most regressive kind of tax," she said.

"The more money you spend, the more you save. That's why we're focused on affordability that helps the people that need the help the most."

Chender said the government needs to operate in a way that lets people know they can afford groceries when they need them and rent at the end of each month.

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