N.S. budget: Tax cuts, bridge tolls and a $697 million deficit

The Nova Scotia government is projecting a $697 million deficit in its 2025-2026 budget.

Unlocking Our Potential: That’s the tagline for the Nova Scotia 2025-26 budget unveiled on Tuesday morning.

The budget follows key election campaign promises made by Tim Houston’s PC government during the November election campaign, including making life more affordable and lowering taxes, to hiring more doctors and improving health-care access and boosting the economy.

Taxes

Premier Tim Houston is delivering on his promise to lower taxes by cutting the HST by one per cent, down to 14 per cent -- a move Houston says will save families more than $1,000 this year.

Small businesses will also see some relief, as the PCs will hold true on their promise to reduce the small business tax rate, dropping it from 2.5 per cent down to 1.5 per cent, while increasing the income threshold from $500,000 to $700,000.

Those changes come into effect for small businesses in April.

Bridge tolls

Halifax-area commuters will also get a break this spring. The tolls at the Macdonald and MacKay bridges will be lifted on April 1 as the province takes over the Halifax-Dartmouth Bridge Commission and makes it a provincial Crown corporation.

The dropping of the tolls works out to around $39 million in lost revenues. Last week, the capital budget showed the province will spend $89 million next year to maintain the two bridges, plus an additional $15 million in operating costs.

“Budget 2025-26 will continue to move Nova Scotia forward,” said John Lohr, the minister of Finance and Treasury Board. “It builds on progress already made and delivers on promises to lower taxes, hire more doctors, increase wages and strengthen our economy. This is how we will help unlock Nova Scotia’s full potential.”

“This was the last toll in the province and to me it seemed unfair,” Houston told CTV News Atlantic’s Bruce Frisko in an interview Tuesday. “Taking the tolls off was important to me. It’s an investment in people’s time.”

Revenue and expenses

The province is forecasting revenues of $16.6 billion, down $305 million from last year, largely due to the HST cut that brings a projected loss of $167.4 million in revenue.

Government expenses will jump from 16.9 billion in 2024-25 to a projected 17.6 billion.

Departmental expenses will climb by 6.2 per cent, or $958.7 million, driven largely by increased spending in health care, education and public works.

The 2025-26 Projected Departmental Budget Expense highlights:

- Health and Wellness: $5.98 billion, a $440 million increase

- Education: $2.23 billion, a $227 million increase

- Public Works: $840 million, a $124 million increase

Part of “Unlocking Our Potential” includes $3 million in groundwork to establish a successful pathway to develop offshore wind potential and $500,000 to advance its critical mineral strategy -- something Houston has signaled will be a key economic focus in order to attract investment and development in the mining sector for key minerals like lithium and cobalt.

Other spending to “Unlock Our Potential” include:

- $8 million for Nova Scotia Loyal to make it easier for Nova Scotians to buy local

- $200,000 to diversify Nova Scotia’s international seafood markets

- $150,000 for a comprehensive, cross-government Trade Action Plan

Trade tensions

Trade tensions with the U.S. and the looming trade war around tariffs could significantly alter the provincial budget. With several key industries bracing for impact, it could result in needed retaliatory measures and relief programs.

The province is tabling a $200-million contingency fund and plans to use it only if needed, given the economic uncertainty of potential tariffs being imposed by the U.S. and President Donald Trump.

“We may not be able to control outside influences, but as a province we can control how we respond, where we invest and what we focus on next,” said Lohr.

Houston said he is heading to the States again with another group of premiers to discuss the negative impact the potential tariffs would have for both countries.

“We’re trying to get to a place where there are no tariffs,” he said. “It’s a struggle. I have to remain cautiously optimistic, but if we can’t, we’re ready to support Nova Scotians. ”

With projected revenues of $16.5 billion and expenses of $17.6 billion, the province is estimating a deficit of $697 million.

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