On April 10, Prince Edward Island Minister (PEI) of Finance Jill Burridge tabled Budget 2025: Securing our Future in the legislature.
Summary/Political Context
On Thursday, Finance Minister Jill Burridge tabled a $3.5-billion budget for the 2025-26 fiscal year, with a record projected deficit of nearly $184 million. The budget includes $294.6 million in new spending, an increase of 9.1 per cent over last year. This year’s budget makes key investments to support the workforce, grow Island businesses, and respond to the real challenges people are facing.
The Minister said the government is also introducing tax reforms that will save Island businesses $9.3 million. They include raising the small business tax threshold by $100,000 to $600,000 and lowering the corporate income tax rate from 16 per cent to 15 per cent. Burridge said the measures would help over 2,800 small- to medium-sized businesses.
Themes
Tariffs
In the face of economic headwinds caused by American tariffs, the government of Prince Edward Island has included $42 million for tariff and trade response, including $32 million for a Tariff and Trade Contingency Fund.
to provide direct support to businesses and workers affected by tariffs, reinforce trade relationships, and help Island businesses diversify into new markets. In addition, the budget establishes a $10 million Tariff Working Capital Program to provide financial relief through flexible loans.
Health Care
Health care remains a top spending priority with the provincial government allocating over $1 billion to Health PEI for the 2025-26 budget. This budget surpasses the billion-dollar mark for the first time and includes a notable increase of $166 million for services offered directly through the Department of Health and Wellness. The increased spending is focused on key areas like primary care, long-term care, and addressing hospital backlogs.
Transportation and Infrastructure
As the province is launching a review of the Municipal Government Act, it has entered into an agreement to provide interim funding to municipalities, and $5.5 million will be earmarked for this. To improve public transportation, including free transit for students and subsidized passes for all Islanders, the government is allocating $160,000 in its 2025 budget. The budget also has $3.2 million for the community sector, including increased funding to food banks.
Education
The budget allocates $117.3 million in spending for education, including $10.5 million to create 190 affordable learning spaces. The government is investing $9.2 million in new funding for staffing, giving teachers more prep time, and increasing the number of front-line school staff. From the budget, $2.5 million will be used to expand the school lunch program.
Fiscal Projections/Economic Outlook
The budget projects revenues of $3.34 billion and expenditures of $3.53 billion, resulting in a forecasted deficit of $183.9 million. That is more than triple the $59.5 million deficit forecasted in last spring’s budget for the same fiscal year.
While the government led by new Premier Rob Lantz expects the deficits to decrease in the years ahead, they will remain high. To improve affordability for PEI residents immediately, the government is increasing the basic personal exemption to $14,650. Then in January of next year, the province will raise all five tax brackets by 1.8 per cent and further increase the basic personal amount to $15,000. The province will also increase the minimum wage to $17 per hour.
TD’s 2025 PEI Budget: Deficits to Persist Over Projection Horizon states, “Economic growth is expected to be solid in 2025. In turn, revenue growth is forecast to be firm, despite tax relief measures for households and businesses.
The uncertain economic backdrop could challenge PEI’s healthy revenue growth projection for this year and cause the Island’s fiscal position to deteriorate.”
The team at Diplomat Consulting looks forward to the opportunity to work with you and your business to assess opportunities for alignment with government objectives, as well as support you in understanding any political risk, please contact Diplomat Consulting at: hello@diplomatconsulting.com.
Naomi Mison
Public Relations Director
