Budget Bulletin: Growing Economy Impacts Revenues

The Nova Scotia economy is doing well. Among the most positive aspects of economic growth is increased employment. In 1999, the private sector created 12,600 new jobs for Nova Scotians.

Other areas are doing well, too. Total personal income in 1999 increased by $804 million over 1998 levels. Since 1996, Nova Scotians' income increased by $1.9 billion. Nova Scotians are showing their confidence in the economy by spending more. Housing starts in 1999 jumped 35.5 per cent, and sales of new cars, trucks, and other motor vehicles grew by 12.3 per cent over 1998. Exports of goods and services were up 10 per cent, and tourism revenues grew by 16 per cent.

The increased number of working Nova Scotians means additional income tax revenues that pay for education, health care, and other important programs and services. A healthy economy also contributes to additional revenues from other provincial sources, such as corporate income tax and harmonized sales tax.

With the private sector fuelling job creation, it is critical that government does not act as a drag on a growing economy. A government carrying a heavy debt load and running high deficits threatens the very economic growth that is creating much-needed jobs for Nova Scotians.

Following is a summary of provincial revenue sources ($ thousands):

Estimate Estimate
1999-2000 2000-01

Personal income tax $1,044,742 $1,144,925 Corporate income tax 127,102 161,653 Harmonized Sales Tax 759,450 786,309 Motive fuel taxes 219,945 232,335 Nova Scotia Gaming Corporation 161,622 175,119 Nova Scotia Liquor Commission 133,500 141,000 Tobacco tax 77,685 80,100 Registry of Motor Vehicles 56,335 61,440 Interest revenues 35,325 35,507 Other provincial sources 171,056 166,165\

Total $2,786,762 $2,984,553

Provincial Revenue Sources Increase, Federal Sources Down

Provincial revenue sources are estimated to increase by 6.6 per cent over 1999-2000 estimate levels. Federal revenue sources for 2000-01 are estimated to be $1,810 million, a reduction of 1.4 per cent over the estimate for the previous year.

In 1999-2000, revenues from provincial sources will account for 60.8 per cent of all revenues. In 2000-01, provincial source revenues will make up 62.2 per cent of all revenues, thereby lessening Nova Scotia's dependence on federal transfers.

NOTE: For other 2000-01 budget information, visit the Department of Finance website at www.gov.ns.ca/finance .