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.

Just Posted

Saanich’s provisional police budget under fire

Grumpy Taxpayer$ of Greater Victoria question why budget requests are rising as crime drops

Victoria Guard Commander leads group of snowmen after ceremony cancelled

Lt.-Cmdr. Michael Irwin wasn’t going to let a bit of snow strip him of his duties

Number of adults living with parents has doubled since 1995

9 per cent of the adult population living with one or more parent

Beauty Day spreads ‘brightness’ at Our Place

Volunteer hairdressers, estheticians, even a tarot card reader took part in the Victoria event

VIDEO: Canada’s flag turns 54 today

The maple leaf design by George Stanley made its first appearance Feb. 15, 1965

Eight cases of measles confirmed in Vancouver outbreak

Coastal Health official say the cases stem from the French-language Ecole Jules Verne Secondary

Plecas won’t run in next election if B.C. legislature oversight reforms pass

B.C. Speaker and Abbotsford South MLA says he feels ‘great sympathy’ for Jody Wilson-Raybould

Workshop with ‘accent reduction’ training cancelled at UBC

The workshop was cancelled the same day as an email was sent out to international students

Former B.C. premier Gordon Campbell accused of sexual touching

Accuser went to police, interviewed by Britian’s Daily Telegraph

Man in Vancouver Island hotel shooting pleads guilty to second-degree murder

Brandon Tyler Woody, from Victoria, to be sentenced in late March in B.C. Supreme Court

Judge rules Abbotsford home must be sold after son tries to evict mom

Mom to get back down payment and initial expenses

Trump officially declares national emergency to build border wall

President plans to siphon billions from federal military construction and counterdrug efforts

Snow turns to slush, rain as it warms up across B.C.’s south coast

Some areas are already covered by more than half a metre of snow following three separate storms

Most Read