Indirect Tax Changes
The budget announces Prince Edward Island's intention to enter into negotiations with the federal government to introduce HST, effective April 1, 2013. The provincial portion of the HST will be 9%. The current PST rate is 10%. Combined with the federal GST rate, the HST rate will be set at 14%. The current PST and GST is effectively 15.5%.
The HST would apply on the same base as the federal GST, which exempts basic groceries and prescription drugs. Further, Prince Edward Island will exempt home heating oil and children's clothing and footwear from HST. The budget also announces an enhanced refundable tax credit for certain lower income taxpayers.
The budget announces that Prince Edward Island will consult with the private sector and the public to develop a detailed plan to implement the HST over the next few months, including adjustments to provincial and excise taxes to accommodate the harmonized tax and transition rules for transactions that straddle the implementation date.
Other Tax Changes
The budget also announces that Prince Edward Island will:
- Implement fee and tax increases (no details announced)
- Increase the environmental tax for tires with a rim size greater than 17 inches
- Introduce a new $500 refundable income tax credit for volunteer firefighters with at least 200 hours of volunteer service a year.
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We Can Help
Your KPMG adviser can help you assess the effect of the tax changes in this year's Prince Edward Island budget on your personal finances or business affairs, and point out ways to take advantage of their benefits or ease their impact. We can also keep you abreast of the progress of these proposals as they make their way into law and help you bring any concerns you may have to the attention of the Prince Edward Island Ministry of Finance, Energy and Municipal Affairs.