Vancouver’s Fraser Institute is attacking a study commissioned by Victoria’s Times Colonist newspaper for containing a significant error that inflates the amount of tax the average British Columbian will pay after the HST comes into effect on July 1.
According to Niels Veldhuis, the free enterprise think tank’s senior economist, the study erroneously claims that British Columbians will pay $1.5 billion more in sales tax. Veldhuis said that number is more than three times the increase in the amount of sales tax that the B.C. government expects to collect under the HST.
“The Times Colonist analysis, which is based on Statistics Canada modelling, is flat out wrong,” he said.
The Vancouver Sun ran the story June 22.
B.C.’s most recent provincial budget estimates that the government will collect approximately $410 million more in sales tax under the HST.
That, however, is being offset with personal income tax reductions.
“In total, British Columbians would pay $410 million more in sales tax, not $1.5 billion,” Veldhuis said.
The Fraser Institute’s Impact of the HST on British Columbian Families study, which was released on June 21, calculated that the average B.C. family would pay $249 more in sales tax in 2011 because of the HST.
But Finance Minister Colin Hansen told Business in Vancouver on June 17 that his government will collect $113 million less under the HST in the first nine months of its implementation than if it had continued with the PST system.
"There’s a whole bunch of transition things that actually allow for slippage,” he said.
The government has estimated that in subsequent years it will reap at least $30 million in savings from streamlined operations. Hansen believes government revenue will be significantly higher with the HST because it will stimulate the economy, create jobs and produce higher wages for workers.