Financial Measures Act Introduced

Acting Finance Minister Angus MacIsaac introduced the Financial Measures Act today, May 11, to support a number of measures in the 2006-07 Nova Scotia budget, including substantial tax relief for Nova Scotians.

"We're promoting a more competitive tax environment in Nova Scotia -- for individuals and businesses," said Mr. MacIsaac. "The changes in this legislation will benefit Nova Scotians for many years to come."

The Financial Measures Act amends a total of 10 acts of the legislature, with seven under the jurisdiction of the Minister of Finance. Minor housekeeping changes are also being made to the Nova Scotia Film Development Corporation Act, the Public Service Act, and the Summary Proceedings Act.

The Income Tax Act will be amended in several places to implement tax measures announced in the budget. Among the changes to existing income tax provisions are:

• increases in income tax exemptions and non-refundable tax credits for individuals
• phasing down and elimination in 2012 of the large corporations capital tax
• increases in the healthy living tax credit to $500 from $150 per child to help with the cost of registering children and youth in sport or recreation activities.

The Income Tax Act will also have some new provisions that will provide for creation of:

• the graduate tax credit, which will give a $1,000 income tax credit to students who have graduated from an eligible post-secondary program and who pay taxes in Nova Scotia
• a child care benefit tax credit, for Nova Scotia parents and guardians of children under the age of six who receive the federal Universal Child Care Benefit program. The credit will offset provincial taxes that normally would result from the taxable federal benefit
• creation of a new energy efficiency tax credit against the large corporations capital tax to help promote energy conservation and the use of renewable energy.

Several amendments are being made to the Provincial Finance Act:

• to ensure that the province will be able to use federal Bill C48 funding for the specific purposes prescribed by the federal government, in the event the purposes differ from those outlined in the provincial Finance Act
• to give the province the authority to provide direct student loans from the consolidated fund, and
• to make sure that all revenues collected under the motive fuel tax, as well as net revenues from the Registry of Motor Vehicles, will be channeled directly into the construction and maintenance of highways.

The Equity Tax Credit Act will be amended to clarify a number of provisions related to labour sponsored venture capital corporations, to ensure the investment provisions operate as intended. As well, the act will change parts of legislation around community economic development investment funds, to give the funds more financial stability as their community initiatives grow.

Changes to the Corporate Capital Tax Act increase the exemption level of paid up capital for trust and loan companies with head offices in Nova Scotia from $10 million to $30 million.

Changes to the Revenue Act will exempt biodiesel produced in Nova Scotia from motive fuel tax and will reduce the tax on private sale of used motor vehicles from 15 per cent to 14 per cent, consistent with the one per cent federal reduction in GST.

Changes to the Sales Tax Act will enable the provision of the household energy rebate, that will take eight per cent off energy and electricity bills for Nova Scotia households, starting in January 2007. Related regulations needed to implement the program will be introduced later in the year, following consultation with industry partners.

The Financial Measures Act does not contain measures related to changes in the federal dividend tax credit. Once the federal legislation is available, Nova Scotia will introduce matching legislation designed to ensure provincial revenues from dividend taxes stay neutral.

The act also contains a variety of housekeeping changes to various pieces of legislation.