"The fact is, every one of us stands to benefit from moving to the HST."
Finance Minister Colin Hansen during the September budget update.
Despite the province's dire financial straits, Finance Minister Colin Hansen promised a brighter future for all British Columbians. He was especially optimistic about the impact of the changes in the sales taxes. The province's 7-per-cent sales tax, as of July 1, will be co-ordinated with the 5-per-cent federal goods-and-services tax.
The HST will lead to "more jobs, more growth and, over time, higher revenues from resources royalties and business taxes to support services we all depend on, like health care and education," Mr. Hansen said. "The positive impact on citizens will be equally widespread."
However, background papers distributed with his budget update tell a different story.
Finance Ministry officials set out the impact of harmonization for six different households: single persons with incomes of $25,000 and $80,000, families of four with incomes of $30,000, $60,000 and $90,000 and a senior couple with a $30,000 income. The ministry makes its calculations based on typical consumption patterns from a survey of household spending.
The calculations show everyone pays more after the sales-tax changes, from a high of $427 for the single person with a $80,000 income to a low of $169 for the single person with an income of $25,000.
The family of four with an income of $30,000 pays $210 more; a family with an income of $60,000 pays $278 more and a family with an income of $90,000 pays $354 more.
A senior couple with a $30,000 income will pay $262 more.
That should be the end of the debate. Business will pay $1.9-billion less in sales taxes and consumers will pay much more. Budget documents show the provincial government expects to collect $6.5-billion in HST revenues next year. Without the HST, government revenues from sales taxes would be about $1.5-billion less. The government has turned to rebates, credits and tax-relief plans to reduce the gushing stream of new revenue on their books.
But they continue to insist the HST is not a tax grab - a claim built on sand. Even with all the new initiatives to soften the HST's blow, ministry officials have to go through contortions to wipe the slate clean. Here's one example: A new program shelters low-income households from the impact of the HST. The credit for low-income households means the senior couple with an income of $30,000 will pay only $2 more. But the HST credit does little for a family of four, with an income of $60,000.
So ministry officials turned to other government initiatives in the budget to show that the HST will have minimal impact. They included the increase to the basic personal and spousal credit, which was unveiled in the budget update. That helped, but it was not enough.
How about the government's new initiative to fund voluntary full-day kindergarten? That will do it. If a family of four with an income of $60,000 has a child who was to enter full-day kindergarten after September, 2010, the family would pay $944 less in sales taxes after the HST was introduced, the ministry says.
But those calculations appear to be stretching the point. Why can't the politicians just be straight with British Columbians?