HST costs average family $350 a year

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  • May. 4, 2011 6:00 p.m.

Former Alberta treasurer Jim Dinning chaired B.C.'s independent panel on the impact of the harmonized sales tax.

VICTORIA – The independent panel reviewing the impact of B.C.’s harmonized sales tax has concluded that it increases prices for 17 per cent of an average family’s purchases, totalling $350 a year.

The panel was appointed by the B.C. government as part of preparations for a mail-in referendum on the HST that begins in mid-June. The panel released its report Wednesday, after a delay to avoid release during the federal election.

It finds that the B.C. government is getting more revenue than it expected in the first year of the HST. The finance ministry’s initial projections were that rebates for low-income families, home energy use and other exemptions would make the tax revenue neutral in the early years.

The report concludes that going back to the former provincial sales tax would cost the province $531 million in net tax revenues in the first year, with the amount increasing in subsequent years. That is in addition to the repayment of a $1.6 billion transition fund paid in instalments by the federal government to B.C.

One reason for the higher revenues that the HST hasn’t deterred spending as expected.

The report notes that while restaurants reported a drop in sales when the HST increased taxes by seven per cent in July 2010, that is not borne out by Statistics Canada measurement. It found that between June 2010 and January 2011, restaurant industry sales increased three per cent in B.C., the same as the national increase over that time.

The report also undercuts the government’s estimate of jobs created due to new business investment. It calculates that The HST will generate 24,400 “better paying” jobs by the end of the decade. The B.C. government has been citing a study by University of Calgary economist Jack Mintz that projected 113,000 new jobs.

Finance Minister Kevin Falcon shrugged off the lower estimate of jobs, saying the public is skeptical about any forecasts of future job growth.

“I think what this report tells us is that it may be a low of 24,000 jobs, or it could be as high as 113,000 jobs, but there will be lots of new jobs created,” Falcon said.

The panel’s report is available at the provincial government’s dedicated website, http://www.hstinbc.ca/

The website also has a new survey form where people can make recommendations on possible changes to the HST. Premier Christy Clark confirmed Wednesday that the government will offer proposed changes to the HST before people vote in the referendum.

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