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

VIDEO: Burned Jeep matches suspect vehicle in two shooting incidents

Police discovered vehicle on fire overnight in Yorkson neighbourhood in Langley

VIDEO: One man suffers serious injuries in crash that closed Fraser Highway in Langley (updated)

One vehicle ends up in ditch after car and SUV collide, air ambulance called in

UPDATED: Gunfire erupts in quiet Langley neighbourhood early this morning

Police have 79A Avenue cordoned off after reports of shots just before 5 a.m.

Upgrades could be coming to popular Penzer Park in Langley City (with video)

Council considers a staff proposal that would move up construction of planned washroom, benches picnic tables and shelter

VIDEO: celebrating Diwali in Langley

Muriel Arnason library marks event for 14th time

VIDEO: Sears liquidation sales continue across B.C.

Sales are expected to continue into the New Year

5 to start your day

A South Surrey shooting, Team B.C. wins the 2017 WHL Cup and more

Justin Timberlake invited back to Super Bowl halftime show

A ‘wardrobe malfunction’ with Janet Jackson caused a national controversy during his last appearance

A scary box office weekend for everyone but Tyler Perry

‘Boo 2! A Madea Halloween’ scared up a healthy $21.7 million in its first weekend in theatres

Even as long-form census data returns, Statcan readies for day without it

Wednesday’s release is expected to show immigrants making up a larger share of the population

WATCH: 10,000 signatures gained to stop ‘no pets’ rental policy

Pets OK BC said about 1,700 animals were surrendered to the BC SPCA last year due to housing issues

Silver Creek reacts after remains found, man arrested

Neighbours of property where remains were found say man arrested was sweet and polite

VIDEO: Oprah Winfrey and a celebrities attend ‘B.C. Miracle Concert’

Fundraiser featured Foster, Steven Tyler, The Tenors, Matteo Bocelli, Laura Bretan, Carly Rae Jepsen

Human remains found at Silver Creek property

RCMP have been searching the property in the 2200 block of Salmon River Road for the past three days

Most Read