HST decision looms over B.C. budget

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.

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.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Island riders conquering new heights

With no races, cyclists tackle Everest challenge to lift community

Saanich police search for suspect accused of using stolen credit, debit cards

Greater Victoria Crime Stoppers says suspect made numerous fraudulent purchases

Homeless woman sentenced to 18 months in jail for selling drugs to Victoria police officer

Officer paid $20 for a substance consisting of heroin, fentanyl and caffeine

Family restaurant to hold Saturday fundraiser for Beirut blast

Wrap and Roll will donate all sales to victims of blast

Police looking for witnesses of alleged assault in Burnside Gorge’s Cecila Ravine

Concerned woman pushed to the ground, had phone broken while taking a photo of a dog

53 new COVID-19 cases, no new deaths cap off week of high infection rates in B.C.

Roughly 1,500 people are self-isolating because they either have COVID-19 or have been exposed to it

Fitness non-profit challenges citizens to invent a game to be physically active

The campaign was launched after a study showed only 4.8 per cent of children and youths in Canada met required standards of the 24-hour movement guidelines

VIDEO: U.S. Air Force pilot does fly-by for B.C. son amid COVID border separation

Sky-high father-son visit plays out over White Rock Pier

3 Vancouver police officers test positive for COVID after responding to large party

Union president says other officers are self-isolating due to possible exposure

Vancouver Island team takes on wacky challenges of world’s largest scavenger hunt

Greatest International Scavenger Hunt taking place Aug. 1-8

New mothers with COVID-19 should still breastfeed: Canada’s top doctor

Dr. Theresa Tam made the recommendation during World Breastfeeding Awareness Week

Collapse of Nunavut ice shelf ‘like losing a good friend:’ glaciologist

The ice shelf on the northwestern edge of Ellesmere Island has shrunk 43 per cent

RCMP looking for missing teen in Comox Valley

Jenessa Shacter was last seen going for a walk in downtown Courtenay

B.C. wildfire crews have battled 111 blazes in the last seven days

Twenty-nine fires remain active, as of Friday (Aug 7)

Most Read