The B.C. Liberals are promising to cut the harmonized sales tax rate by two percentage points over the next three years.Finance Minister Kevin Falcon also proposes to raise corporate income taxes by two points to 12 per cent, and delay a small business tax cut scheduled for next year. The small business income tax sits at 2.5 per cent, scheduled to drop to zero in 2012.Voters will decide if they wish to keep the HST by way of a mail-in referendum that begins next month. If the tax survives, the first one per cent rate cut would take effect July 1, 2012. Falcon said the changes mean the average B.C. family will see an overall tax reduction of $120 a year when the HST rate reaches 10 per cent.While he sees the tax plan as good news in general, outgoing Downtown Courtenay Business Improvement Association president Michael Smale considers Wednesday's announcement to be an election campaign. "They (Liberals) got a lot of bad will out of that," Smale said, noting the ill-timed introduction of the HST when the economy was going south. "But I'm pulling for a reduction in the consumer tax ... I think most people feel good about that because those taxes hurt people at the lower-middle class and the poor the most. If you're rich, what the hell, you pay an extra two per cent. It's no big deal. But if you don't have a lot of money to spend that's a real savings."Incoming DCBIA president Mark Middleton is disappointed businesses will bear the burden."The more disappointing thing for me is that they're not going to implement the small business tax rate cuts they were talking about," he said. "That, I think, probably affects more of us at the street level, if you will...It'd be nice if we could just make it all go away and do it properly."Middleton notes certain Atlantic provinces reduced the provincial sales tax portion when they implemented the HST."So even though the HST had perhaps a broader, more wide-sweeping effect, the fact that they had reduced the provincial sales tax portion of it meant that it was pretty much a wash for the consumer. It didn't come across as a tax grab for the government."Middleton also mentioned government's lack of consultation when it introduced the HST. "There's got to be some intelligent people out there that they could have turned to. Nobody likes paying taxes, but if we have to, all the consumer wants to see is that you're doing a reasonable job spending our money. Don't tell us you're not going to do it and then do it. "There's only one reason why they're talking about these changes, and that's because of public pressure, and the threat that with the recall initiative we may decide to scrap the HST, not that the referendum is going to be binding. I don't think it's the HST as much as it's how they sold it to us...Time will tell if that will bite them on the backside come next election."But even if a new government assumes power, Middleton questions what it would do differently."We're famous in this country for voting out people that we don't like, as opposed to voting in people that we do like," he said. Along with the proposed tax cuts, the B.C. Liberals pledge to issue $175 rebate cheques for each child less than 18 and lower-income seniors this year. The HST costs the average household an additional $350 a year, Falcon said.If a majority of voters opt to keep the tax, low-income rebates would continue to be paid. Single seniors earning up to $40,000 a year would receive the entire $175, and a partial payment for incomes up to $43,500. Senior couples would receive $175 for a combined income up to $40,000 and a partial payment up to a $50,000 income.With rebate cheques taken into account, Falcon said most families are better off with an 11 per cent HST rate. Once the rate falls to 10 per cent, all income brackets are better off than they were under the old PST at seven per cent, he said.The proposed corporate tax increase mirrors a promise made by NDP leader Adrian Dix in his leadership campaign. Dix said Wednesday the public will still reject the HST because the B.C. Liberals can't be trusted to tell the truth.Premier Christy Clark said the increase to corporate taxes and retaining small business income tax would be temporary moves, and the government will return to its business tax reduction program when the budget is balanced. With the HST rate reduction, tobacco taxes would be raised to offset the reductions to HST. Liquor taxes would be unaffected.
— with a file from Tom Fletcher, Black Pressreporter@comoxvalleyrecord.com