Will HST changes be enough?

After taking part in what Finance Minister Kevin Falcon described as the largest listening exercise ever undertaken by the province of British Columbia, the government is ready to make changes to the Harmonized Sales Tax (HST).

  • May. 31, 2011 2:00 p.m.
Pictured left to right are Minister of Forests

Pictured left to right are Minister of Forests

After taking part in what Finance Minister Kevin Falcon described as the largest listening exercise ever undertaken by the province of British Columbia, the government is ready to make changes to the Harmonized Sales Tax (HST). Falcon said the province is now ready to move ahead with an improved HST, which would be good for consumers and job creators in the province.

The province plans to reduce the total HST rate to 10 per cent from 12 per cent in two stages, should British Columbians vote to keep the HST in this summer’s referendum. The provincial portion of the HST would be cut by one percentage point to six per cent from seven per cent on July 1, 2012, and cut one more percentage point to 5 per cent on July 1, 2014.

According to information sent out to the media, “The rate reduction will benefit all B.C. families. The Independent Panel estimated that, on average, harmonization costs B.C. families $350 more per year on their typical expenditures. By reducing the HST rate to 10  per cent, the $350 average cost now becomes a $120 average benefit for B.C. families.”

In addition to the cuts, Falcon said there will be transition payments made to help families adjust to the new pay cut. “Every family will be ahead of the game,” Falcon said.

He added that because of the changes he felt it would help the public make a very clear choice in the upcoming referendum where he hopes they will vote to continue on with the new HST.

This feeling was not shared by Columbia River – Revelstoke MLA Norm Macdonald, who said Premier Clark has continued to flip-flop on the HST.

“Premier Christy Clark and the BC Liberals have released another list of promises in an attempt to make the Harmonized Sales Tax (HST) more palatable to voters, but they are forgetting the primary reason that voters rejected the HST,” said Macdonald. “British Columbians believed the BC Liberals when they said they would not bring in the HST.  That was the first HST promise broken by this government, and now the BC Liberals are making more promises about the HST. Can voters really trust that this time the BC Liberals will do as they say?”

Macdonald stressed that none of Premier Clark’s HST promises will come into effect prior to the referendum when voters will be asked whether or not to extinguish the HST.

“If the BC Liberals really believed that the promised ‘new and improved post-referendum HST’ was the right direction to go, they would have made these adjustments before implementing the tax in 2010.  The truth is, they are desperate to get voters to keep the HST, and will say anything to make that happen.”

As for Clark, who was in Kimberley taking part in an open house, she admitted to the mistake in the way the HST was brought in but is hopeful people will see the Liberals are trying to make the tax fairer.

“I hope that British Columbians will recognize that I agree with them, the way the HST was brought in didn’t work. It was a mistake. The thing is that where we are now, all we can do is go forward. We can’t go backward and fix what happened in the past. I am trying to fix the HST for families,” she said.

“I saw that report that said it was a $350 increase for families in taxes and I said that’s just not fair. So what we are trying to do with the changes we announced is fix the fairness in it,” Clark said. When asked why the government was waiting until 2012 and 2014 to make the cuts, Falcon explained that under the rules of the agreement signed with the Federal Government, there cannot be any changes made to the provincial portion of the HST until July 1 2012.

“We know that the responsible way of marching this down to 10 percent is to do it phased-in,” he said.

Falcon also acknowledged that the government, “Did a terrible job in introducing this significant policy change and we did nothing to explain any of it to the public. I think that is deplorable and I have apologized repeatedly for that. But we were also in a very different situation when the HST was introduced.”

He also spoke of what will happen if the province decides to go back to a Provincial Sales Tax (PST) and Goods and Services Tax (GST). Falcon said this idea is being promoted by the provincial NDP and the group which fought to have a referendum on the issue.

“The impact to the fiscal plan is about three billion dollars. It is a very significant financial impact,” he said.

As for the promises of rebate cheques and tax rate reductions, Macdonald said they, “Have the appearance of tax policy written on the back of a napkin by a government in crisis.”

He went on to add, “This is a government that can’t manage and can’t be trusted.  The bottom line is that the BC Liberals have completely bungled the HST file, and now voters have a responsibility to send a strong message in the upcoming HST referendum.”

Macdonald said that he feels confident that British Columbians will vote yes and reject the broken promises and the mismanagement of the BC Liberals, while voting to extinguish the HST.

This is something Premier Clark hopes does not happen.

“Adrian Dix said he is going to vote against it. He is in favour of a 12 percent tax while we are proposing a 10 percent tax. I think for families it is pretty obvious what is the better deal. We are all getting squeezed, middle class people are finding it harder and harder to get by every day, bringing home two paychecks in some cases and you still can’t make ends meet. Well one of the things you can do to make it a little easier is to roll back taxes,” Clark said.

British Columbians will be voting in a mail-in referendum on the HST. Ballots will be mailed in June and must be returned to Elections B.C. or a Service B.C. office by 4:30 p.m. on Friday, July 22, 2011.

 

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