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

New ‘meowyoral’ race featuring felines announced by Chilliwack animal shelter

Organizers hope the cat election will generate attention for both the shelter and municipal election

VIDEO: Education Minister talks SOGI 123 and the Chilliwack school board election

He said people are making ‘noise about side issues but student safety is important’

Chilliwack athletes win provincial titles at Cultus Lake Triathlon

Close to 700 athletes competed in several distances, with action starting at Cultus Lake Park.

Chilliwack Chiefs add defenceman Alexander Marrocco

Marrocco is the younger brother of PJ Marrocco, a forward from last spring’s RBC Cup champions.

Rally in the Valley in Chilliwack to talk stewardship

It’s an event to connect interested locals with groups making a difference with species at risk

B.C. RCMP turn to Const. Scarecrow to shock speeders into slowing down

New addition will watch over drivers from a Coquitlam median for first-of-its-kind pilot in Canada

Ministry of Agriculture commits $300,000 to help B.C. farmers obtain land

B.C. Land Matching Program supports access to affordable farmland for young farmers

Lower Mainland city calls for slower trains near popular beach

Surrey Mayor Linda Hepner said ‘it’s the least we can do’

Canadian air force short 275 pilots

Attrition outpaces recruitment and training claims Air Force

Teacher suspended after physically shushing, saying ‘shut up’ to student

Grade 5 student reported feeling ‘confused and a little scared’

A B.C. society helps to reforest Crown land after wildfires

Forest Enhancement Society of BC focuses on wildfire mitigation and the reforestation

B.C. marijuana workers may face U.S. border scrutiny

Cannabis still illegal federally south of the border

New political party holds an informational session in Vernon

Maxime Bernier’s The People’s Party of Canada draws about 2o interested patrons to Vernon pub.

B.C. MLAs reminded of rural school struggles

Finance committee hears of falling enrolment, staff shortages

Most Read