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

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

Snow prayers answered as Manning Park ski hill opens Friday

Ski hill will be open seven days a week starting Dec. 14, and cross-country trails as well

Fleeing driver picks fight with Chilliwack police dog, loses

Good dog ‘Griff’ also locates large quantity of what police believe to be crystal meth in Abbotsford

UPDATE: Heavy rainfall, strong winds in forecast for Lower Mainland

Heavy rains, snow expected till Friday morning

Hope rescue crew remove man pinned in semi-truck on Highway 3

Tuesday night rescue was swift, with the man removed safely from the truck within an hour and a half

DFO confirms that investigation of fish habitat destruction in the Fraser River is underway

Conservation and Protection reps ordered Herrling and Carey Island owners to take corrective action

Tommy Chong says Canada took wrong approach to pot legalization

He also talked about the likelihood of another Cheech and Chong film

Fashion Fridays: How to change your beauty routine

Kim XO, lets you in on her style secrets each Fashion Friday on the Black Press Media Network

‘Both things are true:’ Science, Indigenous wisdom seek common ground

Reconciliation between Canada and First Nations is playing out not only in legislatures and courtrooms but in labs across the country

B.C. to move salmon farms out of coastal migration route

Broughton Archipelago plan set to start in spring of 2019

High winds force several BC Ferries sailing cancellations

Tsawwassen to Swartz Bay, Horseshoe Bay to Departure Bay, and Duke Point to Tsawwassen among closures

Facebook reveals bug gave apps unauthorized access to 6.8 million users’ photos

It’s believed up to 1,500 apps built by 876 developers had access to Facebook Stories, private photos

Lower-than-expected parcel volumes helping cut into backlog, says Canada Post

The Crown corporation says that’s largely because it is taking in fewer holiday parcels than expected

Trapped B.C. crash survivor celebrates second chance at life

“Life is good now. It’s good to be alive.”

Vancouver police make arrest in hit and run that killed skateboarder

Charges stem from a two-year investigation into the April 17 death of 30-year-old Ryan Barron

Most Read