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B.C. Liberals promise to lower H.S.T. rate, offer rebates, hike corporate taxes
By Rob Shaw, Times Colonist May 25, 2011 11:11 AM
Victoria, B.C. — The B.C. government is promising to cut the 12 per cent harmonized sales tax by two percentage points, provide rebates to millions of British Columbians and hike corporate tax rates in a last-ditch attempt to save the unpopular tax from defeat in a summer referendum.
Finance Minister Kevin Falcon unveiled long-awaited “fixes” to the tax Wednesday, including cutting the provincial portion one per cent on July 1, 2012, and another per cent in 2014.
Families with children under 18, along with low-income seniors, will receive one-time payments from government worth $175 per child. The payments are designed to eliminate $350 in additional sales tax families currently pay under the HST, reducing costs by $470 and leaving an average family paying $120 less than under the old provincial sales tax, said Falcon. The government will spend $200 million to send out the cheques, which it portrayed as a “bridge” payment to the first HST rate cuts.
The promises are contingent on the public voting to keep the tax in a summer mail-in referendum, Falcon said. The finance minister called his proposal to save the tax “bold, responsive, fair and balanced.”
“On average all families will be better off under the improved HST,” he said, while again arguing that reverting back to the PST would be “a terrible step backwards” for the provincial economy.
The government had said each percentage point reduction of the HST would forgo around $850 million in revenue. To cover that loss, the government proposes to increase the general corporate tax rate to 12 per cent from 10 per cent on Jan. 1, 2012 and postpone a planned 2.5 per cent small business tax cut that had been scheduled for April 1, 2012. The tax hikes on businesses would be temporary, but it’s clear the business community was a major beneficiary of the tax and the changes are modest and responsible to help families, said Falcon.
The government will still return to balanced budgets by 2013/14 and not require any additional program cuts, said Falcon. Around $200 million will be removed from the provincial contingency fund this year to help cover costs. Existing HST rebates for low income British Columbians will also remain.
Proposed legislation authorizing the changes will be introduced in the legislature this afternoon and voted upon next week.
The changes come after a series of HST telephone town halls to solicit public feedback on how to change the tax.
“We've been taking a fresh look at the HST,” said Falcon. “We know we need to get this right, and to get this right we know we need to do things differently than we have in the past. And from the start of this process we set out to do things differently.”
Premier Christy Clark had said a main goal of the fixes was to reduce the $350 in additional sales tax an average B.C. family pays under the HST. That figure was contained in a recent independent panel’s report on the impact of the tax.
A mail-in referendum on whether to scrap the HST and revert back to a combination of the PST and GST will run June 13 to July 22.
The government implemented the unpopular in July 2010. It merged the GST and PST into a 12 per cent HST, but removed provincial tax exemptions for a host of items, thereby raising the prices. The government also faced backlash for announcing the tax two months after the 2009 provincial election, in which the Liberal party said it was not considering harmonizing its tax system.
Falcon again apologized for government’s initial introduction of the tax. "The total lack of communicating any facts to the public was deplorable,” he said.
The federal government, which manages the HST on behalf of the province, has signaled it approves of the province’s proposal and will work with B.C. to implement the changes if the HST survives the referendum, said Falcon. |
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發表於 2011-5-25 10:22
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