Newfoundland and Labrador cuts gas tax, promises $15 minimum wage by Oct. 1, 2023

In a bid to temper the rising cost of living, the Newfoundland and Labrador government is temporarily cutting the provincial gas tax in half and promising a minimum wage of $15 an hour by October 2023.

Premier Andrew Furey said a raft of "temporary and targeted" measures introduced Thursday are intended to help people cope with increasing food and fuel costs, driven mainly by spiking global oil prices. High oil prices are also what will pay for the new measures, said Finance Minister Siobhan Coady, who joined Furey for the announcement.

Furey said a bill to cut the gas tax will be introduced on Monday and "hopefully we can get it passed as quick as possible."

Oil prices have remained well above the estimates included in the provincial budget delivered April 7, Coady said. As of Thursday, oil was about $114 a barrel, well above the $86 a barrel predicted in the budget.

"The difference is helping us in the revenue side of things, and our economy is doing quite well," Coady told reporters in St. John's.

As in the rest of the country, gas prices in Newfoundland and Labrador have skyrocketed, with Thursday's prices ranging from $2.22 a litre in St. John's to nearly $2.50 in parts of Labrador. The wild price fluctuations have mostly been attributed to the war in Ukraine and to disruptions in the global market triggered by countries refusing to buy Russian-produced petroleum as a way of punishing the country for invading its neighbour.

The cuts to the provincial tax on gas and diesel announced Thursday will save Newfoundlanders and Labradorians about eight cents a litre, Furey said. The province is also offering a one-time rebate of up to $500 to residents who heat their home with oil, as well as a 50-cent-an-hour subsidy for small employers to help them transition to the higher minimum wage.

The $15-an-hour wage will be phased in over the next 17 months, beginning with a 50-cent increase to $13.70 on Oct. 1, Labour Minister Bernard Davis said. Next April, it will increase to $14.50 an hour before rising to $15 an hour on Oct. 1, 2023.

Newfoundland and Labrador's current minimum wage is $13.20 an hour, which was the fourth-lowest in the country as of May 1, according to the Retail Council of Canada. Six other provinces and territories, including Ontario and British Columbia, offer a minimum wage of at least $15 an hour.

Josh Smee, chief executive officer of non-profit Food First NL, said in an interview the promised minimum wage increases are a sign of "real progress."

"It's a small win, but it is a win," Smee said Thursday. "That's not to say it's enough, what $15 would have meant when people started asking for $15 is not what it means now, in terms of people's lives."

Smee said he would also like to see the province increase its income support rates and index them to inflation. A family of four on income support in Newfoundland and Labrador gets about $14,222 a year from the program and an additional $17,056 in tax breaks and other benefits, according to Maytree, a Toronto-based anti-poverty organization.

Coady announced in March a one-time payment of up to $400 for families on income support, also as a way to offset rising prices.

Smee said if wages and income support levels were kept in step with the cost of living, the government wouldn't have to keep introducing these one-time payments.

The measures introduced Thursday add up to about $80 million, officials said.

This report by The Canadian Press was first published May 26, 2022.