B.C. Liberals promise to lower H.S.T. rate, offer rebates, hike corporate taxes Victoria, summer

lo_pak

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.

pkphilip

Fraser Institute is a research firm and the government uses its data to make decisions. Are you referring to someone else?

I would say all these documentary are mixed with fictions and facts, I take it as a grain of salt. However, one thing for sure is that the Anti-HST campaign is misleading to begin with. All they are telling people is that they will pay more on their everyday expenses like eating out, services etc...

I have many clients who own businesses and majority of them say that HST makes accounting a lot more straight forward and save them time and money eventually. Although they will not neccessary transfer that savings to their customers, but at least they get to keep more cash in their pockets and will not raise price unless they have to or reinvest into the business. So... the savings are there, just not as "quantifiable" as many said.

I would go against the raise of mininum wage than the HST, it's far more destructive.

Philip

Look4chrisng

回復 33# lo_pak


1.  So if it hurts less, it is not regressive?
2.  If HST is removed, the price will be lower. Yes.  My morning coffee on July 1, 2010 will be cheaper for sure.
3.  Prove?  My Strata fees, restaurant meals, lawyer fees, accountant fees, hair cut, bicycle parts........... But it has nothing to do with the discussions.  I said it is a poor judgement to cite Fraser Institute as a source.   It is kind of like asking Bob Marley should everyone smoke pot.

peter236

Another prime example is the stupid HK government and all that reserves that it is sitting on. The m ...
Lik 發表於 2011-5-26 14:25

Stinky mouth Lik, just look at US, Canada, Portugal, UK, Spain, Italy Greece, Iceland and Japan. They are all debt-ridden and near bankrupt.
They are falling like dominoes one after another.

The western financial model is crumbling quickly. They just can't repay their unmanageable debt. Past economic growth has been based on excessive borrowing.

Hong Kong is probably one of the most financially sound economy in the world. Their budget surpluses keep on increasing. HK has no net debt and no sales tax whatsoever.

lo_pak

回復 37# Lik

You are right, debt level has to be managed. IMO, the BC debt is a bit high and quite a bit is wasted within the bureau system.

Lik

Another prime example is the stupid HK government and all that reserves that it is sitting on. The money might be used to purchase US T-bills and whatnot, earning a paltry 2% interest. Had some of that money been returned to taxpayer's pockets, people could use it as they see fit, and in doing so, stimulate additional economic activity that yields a higher return than that stupid 2% interest.

-Lik

Lik

Debt isn't always bad. If the country does not have any debt at all, economists would probably argue that it is not getting the most out of the country.

Think of it this way -- many (most?) home owners are in debt because of their mortgage. But is that a bad thing if you can afford your monthly payments? Through leveraging, you are getting more out of your salary.

Another example is business lending. If I have $1M capital on hand, am I only going to use that $1M to conduct my business? Or am I going to use that $1M and borrow some more to make it a $5M business that would earn me a much higher return?

The thing you want is manageable debt levels. As long as the amount of debt is not a burden to the economy, you are actually getting more out of what you have.

-Lik

lo_pak

回復 35# peter236

Me too... I don't think I can live that long until that day...

peter236

回復  peter236

They will be gone if we have no debt...
lo_pak 發表於 2011-5-26 11:59

We just don't see how and when they will eliminate all the debt.

lo_pak

回復 32# blue20ae

Peter and I are talking about "sales" tax... The majority of their income come from the corporate tax and our income tax...