ST. JOHN'S, N.L. - Premier Danny Williams, in a bid to build on his already commanding majority government, is offering Newfoundlanders the largest personal income tax cut in the province's history in the run-up to a provincial election.
Drawing from a $261-million budget surplus, Williams also slashed user fees Thursday while increasing spending on schools, the health-care system and infrastructure.
The value of the income tax cut was pegged at $155 million.
"For most people in the province, it amounts to an increase in real income by between one and two per cent,'' Finance Minister Tom Marshall told a news conference before he tabled the voter-friendly budget.
"It's like everybody's gotten an after-tax raise, so a lot of people are going to be really happy.''
According to the government, a two-income family, each making $30,000, will see their income tax bill reduced $860. A single income earner with a taxable income of $35,000 will save $567, and someone earning $50,000 will save $911.
Under the province's electoral law, voters in the province will go to the polls Oct. 9.
The budget surplus can be largely attributed to the province's booming offshore oil sector, which was the case last year when Newfoundland posted a $76-million surplus.
The province has increased total expenditures about four per cent to $5.6 billion. Its accumulated debt was trimmed to $11.5 from $11.6 billion, though that's still the highest per capita debt in the country.
"I think everyone will be happy with this budget,'' Marshall said.
"I think this budget will be effective in having all Newfoundlanders and Labradorians recognize that ... under (Williams's) leadership, we are making real and meaningful gains. I think that will appeal to all voters.''
The back-to-back surpluses signal a new era in the province's historially troubled finances, allowing Newfoundland to achieve greater financial autonomy from Ottawa, Marshall said.
But he acknowledged that the volatility of oil prices could swiftly change the province's fiscal outlook.
"What are production levels going to be? What are exchange rates going to be? It's very difficult to try to estimate these things.''
When the Tory government was elected in 2003, it faced a deficit near the $1-billion mark and the prospect of cutting public services.
But Thursday's budget reflects a much different picture, with dozens of user fees eliminated and $3.4 billion earmarked for improving health care and education, a boost of $300 million.
Currently, Williams's Tory government holds 35 seats in the house of assembly. The Liberals have 12 seats and the NDP one.
