Federal government's tax pause will cost P.E.I. coffers about $14 million
King says he received no advance warning from PM that a HST holiday was coming
Prince Edward Island Premier Dennis King says the federal government's two-month sales tax pause could cost the province roughly $14 million due to the loss of its provincial portion of the harmonized sales tax.
Prime Minister Justin Trudeau announced Thursday that the GST (goods and services tax) and HST will be temporarily removed from Dec. 14 to Feb. 15 on goods such as children's clothes, diapers and toys; restaurant meals; and some types of prepared foods not previously exempted.
The government will also send $250 cheques to 18.7 million Canadians who worked in 2023 and made less than $150,000, with Trudeau saying it will help alleviate today's higher cost of living.
Prince Edward Island is one of five provinces with an HST, and the federal tax pause means that the provincial portion of the tax won't be collected either.
During Friday's sitting of the provincial legislature, King said there is no agreement on whether the federal government will reimburse the province for the $14-million loss. He said his government will negotiate to see what could be done about the missing revenue.
"We will also match the 10 per cent reduction in the cost for now, and try to figure out with the federal government how we can make our treasury whole so we can make the investments that we need to make," King said.
Province received no heads-up
In an interview with CBC News, King said he had a "mixed" reaction when he found out the HST would be waived for two months on the additional items.
While he said he understands the federal government wanting to do everything it can to reduce the cost of living for Canadians, he was disappointed he had to learn about the announcement through media outlets and not from Trudeau's office.
"It is troubling that we would not get consultation or even the decency of a heads-up that it was coming," he said on the floor of the legislature.
"To have to learn about this through the media is not, I would say, good intergovernmental relations."
King said he would have preferred to have had a discussion involving the provincial legislature and finance officials, and then present a package to Ottawa highlighting items that would benefit Islanders.
"We didn't get the opportunity to do that. But we will, again, we will support this initiative with the federal government even though we didn't have any consultation."
King said he expressed his frustration during a phone call Thursday night with Dominic LeBlanc, the federal minister of public safety, democratic institutions and intergovernmental affairs. King said the two did not discuss reimbursement.
Overall, King said he has a good relationship with the federal government and likes Trudeau and LeBlanc — and is looking forward to the same kind of ties with Conservative Leader Pierre Poilievre should his party form the federal government after the election expected in 2025.
No plans to reduce spending
Although King said covering a $14-million hole in the province's budget will be a "challenge," he promised there will be no deep funding cuts to any programs that Islanders rely on, such as health care, education and housing.
He did say every department will be asked to be "as fiscally responsible as possible," adding: "If there's savings to be found that make sense, that would be great.
"But at the same time we also believe we will see a little bit of an increased spending activity as well over this time of two months," King said.
"So perhaps there's a little bit of extra taxation money that will come that we weren't budgeting for as well. So at the end of the year, we'll see where it all ends up, but we'll try our best to be within the scope of budget and deficit that we had anticipated earlier this year."
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With files from Nicola MacLeod