It was announced this morning that government would undo the most contentious aspect of their 2016 Budget. As it stood, the original “Temporary Deficit Levy” was set to steal $300 per year from those making $25,000 and $900 from top income earners. The system was heavily criticized for taking a disproportionate amount of money from lower income earners.
For anyone in the lowest bracket ($25,000 or less), the $300 levy would eat up a higher percentage of income: $300 = 1.2% of $25,000. But for someone making $200,000, the $900 levy was only 0.45% of their income.
Today, Premier Ball declared people making under $50,000 a year will no longer have to pay a levy. That means nearly 3/4’s of Newfoundlanders & Labradorians are off the hook. “Under the original program close to 38 percent of tax filers did not pay – now with these changes close to 74 percent of tax filers will not pay, or 3 in 4 tax filers in the province,” said Premier Ball.
Also, people earning between $50,000 and $100,000 will no longer have to pay as much as previously announced; the levys now start at $100 for someone making just over $50,000 (That’s $500 less than the $600 they were set to pay). Those making $100,000 will now pay $700 (instead of $750).
The rich however, will be paying significantly more. Someone in the ball park of $650,000 will now be paying $1,800 — that’s twice the levy they were slated to pay.
Federal Funding Relief Allowed for Changes to Temporary Deficit Reduction Levy
Changes to the Levy have been made possible because the Federal Government deferred the province’s payments under the Equalization Repayable Floor Loan. Effective June 1, 2016, the monthly repayments currently being paid to the Federal Government will be suspended.
Under the 2005 Equalization Repayable Floor Loan, the province owed $378 million to the federal government due to overpayments. We currently still owe $267 million, but those payments are now suspended until April 2022.
“We are committed to working with all levels of government, and with Canadians, to ensure long-term economic growth that benefits everyone. This announcement today will contribute to the long-term economic prosperity of the province” said Judy Foote, Minister of Public Services and Procurement.
Our Finance Minister, Cathy Bennett, added an awkwardly opportunistic comment. “This announcement today is encouragement that the Federal Government recognizes that our government has a solid plan to deal with the fiscal challenges facing the province.”
It’s not a “solid economic plan” so much as The Trudeau Government giving us six years’ grace on $267 million we owe.