B.C. gets interest break on HST transition

B.C. has five years to repay Ottawa its $1.6 billion transition payment, interest free.

B.C. Finance Minister Kevin Falcon

B.C. Finance Minister Kevin Falcon

The B.C. and federal governments have agreed to a five-year interest-free repayment schedule for the $1.6 billion harmonized sales tax transition fund, but the deal does not change the province’s deficit position.

B.C. Finance Minister Kevin Falcon said Wednesday the interest break will save B.C. $118 million in interest costs, since the money doesn’t have to be borrowed all at once to repay by a March 31 deadline. Instead Ottawa will accept five annual transfers of $320 million each.

The entire repayment is still being charged to the province’s books in the current fiscal year, which ends this spring. Combined with reduced provincial revenues and slightly increased spending, B.C.’s deficit for this year is forecast to be $3.1 billion.

The terms of the referendum where voters opted out of the HST require the province to restore the PST with the charges and exemptions that existed prior to July 2010. A panel of tax experts has been appointed to review the PST for possible administrative efficiencies when it is reinstated in the spring of 2013.

When the HST was rejected, the finance ministry estimated it would bring in an additional $600 million in revenues in each of the next two years, based on economic growth and extending the seven-per-cent provincial portion of the sales tax to a variety of services.

Former premier Bill Vander Zalm, who spearheaded the petition to repeal the HST, said both the federal and provincial governments are dragging out the transition period to benefit their bottom line and that of businesses.

Businesses will have to forgo input tax credits available under the HST, and convert cash registers and accounting systems back to collecting the GST and PST separately. Low-income B.C. residents will lose HST rebates starting in 2013.

The total cost to B.C. of going back to the PST has been estimated at about $3 billion. In addition to the transition fund repayment, and the foregone extra revenue, B.C. has to re-establish a provincial sales tax administration and audit department.

About 300 provincial tax collectors were transferred to the federal payroll when the HST took effect in July 2010.

Transition rules for businesses switching from the HST back to the former provincial sales tax are expected to be announced by March 31, the end of the current fiscal year.

Just Posted

Francine Cunningham is an award-winning Indigenous writer, artist and educator. (SUBMITTED PHOTO)
Electric Mermaid online event hosts panel of Indigenous writers

Event takes place through Char’s Landing in Port Alberni

San Group owners Suki, left, and Kamal Sanghera with technical manager Richard Zeller at their facility in Port Alberni in Feb. 2021. The forestry company is looking at expanding its business into northwest B.C. by setting up a manufacturing unit in Terrace. (SUSAN QUINN/ Black Press file photo)
Forestry company San Group eyes Terrace for northwest B.C expansion

The company looks at Skeena Industrial Park to set up a sawmill manufacturing unit

This photo of the Rack and Rally squash club was taken in June 2021. (ELENA RARDON / ALBERNI VALLEY NEWS)
Improvements planned for Third Avenue squash club

City council concerned about how long construction is taking

EJ Dunn principal Darrin Olson, left, and Nuu-chah-nulth Tribal Councils Richard Samuel, right, present Trey Kyte, second from left, with his Grades 2-3 Spring Festival 2021 winning poster. With them are Kytes fellow banner painters Liam Horbatch, Sybil Purwins and Macen Avery. (SUSAN QUINN/ Alberni Valley News)
SD70’s biennial First Nations spring festival goes virtual for 2021

Alberni Valley schools showcase Indigenous learnings from past year

Maxwell Johnson is seen in Bella Bella, B.C., in an undated photo. The Indigenous man from British Columbia has filed complaints with the B.C. Human Rights Tribunal and the Canadian Human Rights Commission after he and his granddaughter were handcuffed when they tried to open a bank account. THE CANADIAN PRESS/HO-Heiltsuk Nation, Damien Gillis, *MANDATORY CREDIT*
VIDEO: Chiefs join human rights case of Indigenous man handcuffed by police in B.C. bank

Maxwell Johnson said he wants change, not just words, from Vancouver police

Flowers and candles were laid on the driveway of the Weber home, where Kerri Weber was found dead in November 2020. (Black Press Media file photo)
Greater Victoria man to stand trial for death of his wife last November

Ken Weber is charged with second-degree murder of his wife, Kerri Weber

People line up to get their COVID-19 vaccine at a vaccination centre, Thursday, June 10, 2021 in Montreal. THE CANADIAN PRESS/Ryan Remiorz
Vaccines, low COVID case counts increase Father’s Day hope, but risk is still there

Expert says people will have to do their own risk calculus before popping in on Papa

The discovery of a missing woman’s body in Nanaimo earlier this month is now being treated as homicide, say Nanaimo RCMP. (File photo)
Discovery of woman’s body in downtown Nanaimo now being investigated as a homicide

Amy Watts was found dead near Albert Street and Victoria Crescent on June 3

B.C. Premier John Horgan listens as Finance Minister Selina Robinson presents the province’s latest budget, April 20, 2021. The budget projects $19 billion in deficits over three years. (Hansard TV)
B.C. government budget balloons, beyond COVID-19 response

Provincial payroll up 104,000 positions, $10 billion since 2017

Ocean debris is shown on Long Beach in Tofino, B.C. on April, 18, 2012. THE CANADIAN PRESS/Jonathan Hayward
Shoreline cleanup finds COVID-related trash increased during height of the pandemic

Great Canadian Shoreline Cleanup reports litter from single-use food packaging nearly doubled

Doctor David Vallejo and his fiancee Doctor Mavelin Bonilla hold photos of themselves working, as they kiss at their home in Quito, Ecuador, Wednesday, June 9, 2021. Doctor Vallejo and Doctor Bonilla suspended their wedding in order to tend to COVID-19 patients and in the process Vallejo got sick himself with the disease, ending up in an ICU for several days. (AP Photo/Dolores Ochoa)
Love, sacrifice and surviving COVID-19: one couple’s story

COVID hits Ecuadorian doctors who delayed wedding to treat sick

The Tsow-Tun Le Lum Society, which has been operating a treatment centre on land leased from the Nanoose First Nation for 35 years (pictured), has begun a fundraising campaign to open a new centre near Duncan. (Tsow-Tun Le Lum Society photo)
New residential school healing centre to be built near Duncan

$5-million Indigenous treatment centre will help survivors of residential schools heal

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Most Read