The B.C. government announced changes to the harmonized sales tax (HST) that fail to address opponents’ central beef with the levy: that it is unfair because the tax does not apply to all goods and services.
Finance Minister Kevin Falcon told media May 25 that his government plans to chop the 12% HST by two percentage points by July 2014 and provide rebate cheques to hundreds of thousands of British Columbians if the HST passes a mail-in ballot referendum that runs June 13 through July 22.
Falcon plans to lower the provincial portion of the HST to 6% on July 1, 2012 and to 5% by July 1, 2014. The federal portion of the HST will remain at 5%.
In addition, families with children younger than 18 years old and modest-income seniors will be mailed a one-time transition cheque of $175 at the end of 2011 as long as the HST passes in a referendum.
“We’re disappointed that the changes don’t address the heart and soul of what our issue has been with the tax,” British Columbia Restaurant and Food Service Association CEO Ian Tostenson told Business in Vancouver after Falcon’s announcement.
“There is a tax discrepancy between retail food and restaurant food. As long as that discrepancy exists, it will take us a while to recover.”
Tostenson added that the tax also hurts consumer confidence because the average person has a hard time seeing the correlation between the savings that businesses are said to be reaping and positive economic impacts such as more jobs and price reductions.
“If we could have the economic stimulus that the Vancouver Canucks provide, it wouldn’t matter. Hockey is giving people the confidence to go out and spend. When that’s not there, what in this economy will provide the stimulus for people to go out and spend?”
Glen Korstrom
Twitter: @GlenKorstrom