2 premiers ask Ottawa to cover provincial cost of proposed tax holiday

Two premiers are askingOttawato cover the provincial cost of the Trudeau government's promisedtax holiday.

On Thursday, Prime Minister Justin Trudeau said he would seek to lift the GST and HST from some goods until mid-February in a bid to alleviate some of the affordability pressures people have been experiencing in the post-pandemic era.

But in the five provinces that have a harmonized sales tax a combination of provincial and federal taxes on goods and services administered by the federal government the entire tax, including the provincial portion, will be removed.

That measure would put a large dent in some province's finances. New Brunswick Premier Susan Holt said Friday that the tax break could cost the province $62 million.

"They can't take $62 million out of the New Brunswick revenues without an engagement with us and an agreement with us," she told reporters.

Prince Edward Island Premier Dennis Kingexpressed similar concerns on Friday. Hesaidthe measure would cost his province $14 million.

"There is no agreement that the federal government would come in and give us that money or make us whole in any way," King told the provincial legislature."We'll continue working with them and see what we can do, because it would drive a bit of a hole in our budget."

King said he's willing to work with the federal government on affordability measures but noted that he wasn't given a heads-up about the tax holiday.

"I found out about this yesterday in a news briefing that came across our desk. We did not get the courtesy of a call to say it was coming, or any kind of request for our input," he said.

WATCH |Trudeau asked about impact GST break could have on provincial budgets:

Trudeau asked about impact GST break could have on provincial budgets

22 hours ago

Duration 0:35

When asked about the impact his recently announced affordability measures could have on provincial budgets, Prime Minister Justin Trudeau said he expects his provincial counterparts to recognize the financial challenges Canadians are experiencing.

When asked if she expects Ottawa to reimburse the province, Holt said she was "optimistic."

Prime Minister Trudeau wouldn't commit to reimbursing provinces for lost revenue when asked about the premiers' concerns on Friday.

"I think every provincial government across the country understands how important it is to be there for Canadians who are facing real pressures around the cost of living," he told reporters.

"I'm expecting provinces who see the challenges that their citizens are facing to realize that this is a way they can be there for people."

Not all provinces are concerned about the federal tax holiday. Ontario already had eliminated the provincial portion of the HST from some of the goods proposed for the federal exemption, including children's clothing, shoes, diapers, books and newspapers.

"We did it two years ago. We just didn't go out there and do cartwheels. Eighty per cent of what they say they're going to do, we're doing," Ontario Premier Doug Ford tolda press conference on Friday.

"I'vegot to give them kudos. Any government, I don't care what political stripe, wants to put more money into people's pockets, good for them."

Newfoundland and Labrador Premier Andrew Furey also endorsed the federal plan and said his government would follow suit.

"Our government is focused on affordability for families in Newfoundland and Labrador. We will be removing the HST from many goods and services for two months," he said in a post on X, formerly Twitter.

Nova Scotia is currently in an election campaign so its provincial government is in caretaker mode.

Feds underestimating cost: economist

The federal government says the tax holiday will cost the federal treasury an estimated $1.6 billion in foregone revenue.

But economist Trevor Tombe estimates that covering the provincial portion would make the actual cost of the tax break almost double the government's estimate.

"For the HST provinces, the compensation they're entitled to in the tax coordination agreements would bring the total cost to something like $3 billion," Toombe said in a post on X.