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

Castlegar Hospice director recieves Sovereign Order of St. John of Jerusalem award and grant

Award was given for a new project which will use virtual reality-enabled immersive learning.

Nine fires burning in West Kootenay

All fires considered to be lightning caused.

PHOTOS: Castlegar swimmers at Trail meet

Castlegar swimmers took part in the Greater Trail Stingrays meet last weekend.

PLACE NAMES: Rossland neighbourhoods, Part 1

Early Rossland townsite built on top of mining claims

PHOTOS: Elusive ‘ghost whale’ surfaces near Campbell River

Ecotourism operator captures images of the rare white orca

Police probe report of shooting as Raptors rally continues

There were reports of a woman being injured at the event that celebrates the team’s NBA title win

Oil and gas sector cautious as deadline on Trans Mountain decision nears

Trudeau government expected to announce whether it will approve pipeline for second time on Tuesday

Skipping school costs a dozen B.C. students chance at a new car

Cowichan’s Jared Lammi showed up and won $5,000 cheque toward vehicle, but he can’t drive

People throwing food at a bear in Fernie alarms conservation groups

“Approaching and feeding bears contributes to habituation,” says conservation group

Feds announce $50M strategy to fight dementia

Emphasis is on prevention and and supporting caregivers

Federal Liberals’ plan to help first-time homebuyers to kick in weeks before election

Ottawa to pick up 5% of a mortgage on existing homes for households that earn under $120,000 a year

B.C. VIEWS: When farmland protection doesn’t protect farmers

Secondary residences aren’t mansions, families tell Lana Popham

Bombers down B.C. Lions 33-23 in season opener

Former Lion Andrew Harris leads Winnipeg with 148 rushing yards

Most Read