News

HST decision looms over B.C. budget

Finance Minister Colin Hansen presents his 2011 budget in Victoria Tuesday. A new budget won
Finance Minister Colin Hansen presents his 2011 budget in Victoria Tuesday. A new budget won't be adopted until a new premier takes office in early March.
— image credit: Tom Fletcher/Black Press

VICTORIA – Finance Minister Colin Hansen presented a "status quo" budget Tuesday that he described as leaving a recovering B.C. economy for the next premier.

When the successor to Premier Gordon Campbell is sworn in early in March, it will fall to him or her to decide if carbon taxes will continue to rise and small business taxes will be eliminated next year as planned. But the most significant decision of 2011 will be made by voters directly – to keep the harmonized sales tax or go back to the old provincial sales tax.

In his budget speech to the legislature Tuesday, Hansen warned of "major implications" that go beyond the return of $1.6 billion in transition funds to the federal government.

"The fact is, no province has ever backed out of the HST after implementation," Hansen said. "Being first would put us into uncharted waters."

Hansen said he could not put a figure on the overall costs of scrapping the HST, although it would include repaying $1.6 billion in transition funds to the federal government and reconstructing a provincial sales tax department at a cost of $30 million a year.

NDP finance critic Bruce Ralston said if the government really doesn't know how much a rejection of the HST will cost, it is a "colossal failure" to prepare for that likelihood.

"But I think they do have an idea," Ralston said. "They've chosen to hide that from British Columbia for tactical purposes as they face a referendum, which I think in their heart of hearts they still figure they can succeed on."

B.C. Chamber of Commerce president John Winter said business groups that opposed the HST have softened their criticism. Businesses are starting to see the savings from simpler collecting and filing of sales taxes, and many are gearing up to promote those benefits before a referendum on the HST.

"To go back to the old system would be very difficult," Winter said.

The latest finance ministry projection is that B.C. will finish the fiscal year March 31 with a deficit of about $1.3 billion, down from $1.7 billion estimated a year ago. That recovery is driven by better than expected corporate tax revenues, which plunged following the world recession of 2008.

But a major part of B.C.'s expected recovery comes from the HST, whose revenues are projected to keep climbing along with personal income tax until the province returns to surplus in 2013-14. Finance officials calculate that much of that sales tax revenue would have come in under the old PST as well, since the main component is retail sales of goods that are taxed the same under both systems.

But over time the HST is expected to grow as modern consumers spend more of their income on services. The budget projects HST revenues of $4.2 billion this year, rising to $5.8 billion in the fiscal year beginning April 1, $6.2 billion the following year and $6.5 billion the year after that.

We encourage an open exchange of ideas on this story's topic, but we ask you to follow our guidelines for respecting community standards. Personal attacks, inappropriate language, and off-topic comments may be removed, and comment privileges revoked, per our Terms of Use. Please see our FAQ if you have questions or concerns about using Facebook to comment.

You might like ...

Snow to Surf race seeks volunteers, youth teams
 
Families enjoy guy show, hatchery open house
 
MARS: Snow geese population adapting and thriving
Lambrick Park student makes curling Team BC
 
Lions, Gryphons will duel for city soccer championship
 
Royals top Cougars, extend win streak to five
Redemption for Spartan Rugby players vs. the Cowican Bulldogs
 
Sooke beat Fusion in Richmond
 
Bronze Gloves in Parksville has a great ring to it

Community Events, October 2014

Add an Event

Read the latest eEdition

Browse the print edition page by page, including stories and ads.

Oct 21 edition online now. Browse the archives.