Ottawa tell Maritime provinces they must repay HST revenues after overpayments

HALIFAX — Ottawa has told the Maritime provinces they will have to pay back hefty HST revenues after overpayments in recent years.

New Brunswick, Nova Scotia and P.E.I. said Thursday the federal government told them their cut of harmonized sales tax revenue will drop this year to make up for previous overpayments.

Nova Scotia Finance Minister Randy Delorey said Thursday his province’s share was less than $100 million.

“We’ll take a hit from the prior years in this fiscal year,” said Delorey, who confirmed that he was told last month of the adjustment.

Newfoundland and Labrador’s Finance Department reportedly got a similar notice, but did not respond to a request for comment Thursday.

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In an email, Prince Edward Island’s Finance Department said it is reviewing the implications of the federal adjustment.

“We have reached out to Ottawa to ensure we have a clear understanding of this adjustment and its impact. The Atlantic premiers are meeting this Friday and the regional implications of this federal adjustment will be a topic of discussion.”

In its fall update, the Island government said its books had marginally improved, with the projected deficit lowered from $9.6 million to $7.9 million for fiscal 2016-17.

A spokeswoman with New Brunswick’s Finance Department said in an email that it too was informed of new federal estimates in December that will “result in large, negative adjustments.”

“The adjustment was the result of a lowering of the national revenue pool by the federal government, on which New Brunswick’s payments are based, and strong housing data for Ontario that had adverse implications on the share of this pool provided to HST-recipient provinces,” wrote Bonnie Doyle Creber.

“The impact will be reflected in the province’s revised 2016-2017 revenue estimates.”

Delorey said the harmonized sales tax overpayment would be reflected in Nova Scotia’s upcoming spring budget, but he wouldn’t say what the loss of revenue will mean for the province’s attempts to remain in the black.

In the December fiscal update, the province said it had a slim surplus of $12.1 million, although that figure was $5 million less than estimated in last April’s budget.

“We are going to continue to work diligently … to maintain our commitment and work towards balancing the books,” said Delorey.

A spokesman at the federal Finance Department wouldn’t confirm either overpayment amounts or that letters had been sent to the provinces, saying it was up to each to speak to the issue.

However, in an email the department explained that HST shares are estimated, and only become final after five-and-a-half years. As new data comes in, the amounts are re-estimated.

“As a result of that process, a province may receive more revenue or may be required to repay revenue that it has already received. In the event that the total repayment associated with prior years is greater than seven per cent of the estimated current entitlement, provinces have the option of making it over three years.”

Keith Doucette, The Canadian Press