March 6, 2026

The Honourable Craig Pardy                                                                      
Minister of Finance


Dear Minister Pardy,

On behalf of the Atlantic Chamber of Commerce (ACC), I am writing as the recognized voice of business in Atlantic Canada. The chamber of commerce and board of trade movement in our region is a coordinated, community-embedded network that reaches thousands of businesses across the four provinces. Within this network, the ACC serves and engages the 21 chambers of commerce and boards of trade located in Newfoundland and Labrador, providing a shared platform for collaboration, insight, and regional advocacy. Collectively, we represent more than 16,000 businesses through our 91 member chambers and boards of trade throughout Atlantic Canada. We are deeply committed to fostering a competitive business environment that supports growth, innovation, and job creation across the province.

We respectfully request that the Government of Newfoundland and Labrador eliminate the Health and Post-Secondary Education Tax (HAPSET), the 2% payroll tax applied to annual payrolls exceeding $2 million. This tax, while intended to support vital sectors like health and education, has unintended consequences that hinder economic development precisely at a time when the province faces significant challenges, including high operational costs, out-migration, and persistent labour shortages.

The Progressive Conservative (PC) Party has recognized the importance of reforming payroll taxes to support local businesses. In the 2025 platform and through related announcements in 2024, the Party committed to reduce and reform the payroll tax to lessen the burden on businesses, encourage growth, and make it easier for employers to hire and retain staff.

The current structure of HAPSET creates a disincentive for growing businesses. SMEs approaching or exceeding the $2million payroll exemption threshold incur a 2% tax on the portion of remuneration above that amount, along with ongoing administrative burdens for compliance, reporting, and allocation agreements, particularly for associated employers. This cost on payroll above the threshold can discourage businesses from expanding, hiring additional employees, or increasing wages.
Eliminating HAPSET would remove this disincentive, allowing businesses to pursue growth without concern over crossing the threshold. This change could encourage hiring and business expansion, thereby supporting a stronger economy. We believe this reform aligns with the government's goals of economic recovery and sustainability, as outlined in recent fiscal updates.

Thank you for considering this important matter. We look forward to your response and the opportunity to work together for a prosperous Newfoundland and Labrador.

Sincerely,

Rhonda Tulk-Lane
CEO, Atlantic Chamber of Commerce
Chair, Chambers of the Federation