B.C. deficit jumps after HST defeat

The defeat of the harmonized sales tax has nearly tripled B.C.'s deficit forecast for the current fiscal year, doubled it for next year, and left a $458 million gap for 2013 when the B.C. Liberal government has committed to balance the budget and call an election.

Finance Minister Kevin Falcon says the government will find a way to bring B.C.'s budget out of the red by 2013.

VICTORIA – The defeat of the harmonized sales tax has nearly tripled B.C.’s deficit forecast for the current fiscal year, doubled it for next year, and left a $458 million gap for 2013 when the B.C. Liberal government has committed to balance the budget and call an election.

Finance Minister Kevin Falcon revealed the latest projections in the province’s first quarter economic update Thursday. The ministry calculates that scrapping the HST will cost the provincial treasury $2.2 billion over three years, including $700 million less revenue once the old provincial sales tax is reinstated. Further revenue reductions are expected in later years before economic growth makes up the sales tax revenue.

Falcon said he will be traveling the province this fall for the annual budget consultation, but he has already heard that the public has little appetite for new tax or fee increases to make up for undoing the HST.

He said the cabinet has not yet decided if the “net zero” mandate for public sector union negotiations will be extended after it expires this December. But he gave a strong hint to the B.C. Teachers’ Federation and the B.C. Government and Service Employees’ Union, the two largest groups that have not yet agreed to contracts under those conditions.

“I’m not looking at any kind of a rollback in wages,” Falcon said. “I think all we’re saying is that the public sector needs to recognize that in the world we’re in now, this isn’t a good time to be asking for significant increases.”

NDP finance critic Bruce Ralston refused to comment on whether teachers or other government workers should get raises, after his party helped in the two-year effort to repeal the HST. He said if lower-paid public employees have to sacrifice for Falcon’s cost-cutting exercise, executives in government and Crown corporations should also share the pain.

The finance ministry now expects the deficit for 2011-12 to be $2.3 billion, up from $925 million in the spring budget. That is mainly due to borrowing to repay the federal government’s $1.6 billion HST transition fund.

The deficit for 2012-13 is doubled to $805 million, and another $458 million must be made up through cost reductions or extra revenue for the government to balance the books for 2013-14.

The HST reversal means the province’s total debt is expected to reach $62.3 billion in the next three years.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Comments are closed

Just Posted

Peak on the lower Fraser River expected to arrive Monday

Peak predicted for July 6, with flows decreasing from there: River Forecast Centre

Abbotsford Flea Market reopening on Sunday

Market has been closed since March 8 due to the COVID-19 pandemic

UPDATE: Missing Chilliwack 35-year-old woman located

The RCMP were asking for the public’s help to find woman not seen in months

Single family home sales in Chilliwack surge in June

Sales reach the highest level in three years with prices rising due to pent-up demand

VIDEO: Car goes off Highway 1 and into a ditch in Chilliwack

Eastbound vehicle left the highway ending in the ditch on south side of Luckakuck Way

Kamloops RCMP officer’s conduct under review after blackface jokes on social media

Meinke’s Instagram is private and it’s unclear when the posts were made

NHL says 35 players have tested positive for COVID-19 since June 8

Positive rate for the league is just under 6%

Man charged in Rideau Hall crash had rifle, shotguns, high-capacity magazine: RCMP

Hurren is accused of threatening to cause death or bodily harm to the prime minister

B.C. extends income assistance exemption for COVID-19

Provincial program to match Ottawa’s CERB, student pay

Broadway veteran Nick Cordero dies from coronavirus complications

During Cordero’s hospitalization, Kloots sent him daily videos of her and their 1-year-old son, Elvis,

Most Read