B.C. Finance Minister mulls ways to kill HST sooner than expected

Share

B.C. Finance Minister Kevin Falcon says the government will kill the HST more quickly than expected if it can get the federal government and private business to hurry up on their handling of the issue.

With the HST voted down by British Columbians in a referendum late last month, the provincial Liberal government has said it will scrap the tax by March 31, 2013 at the latest, reverting from the 12-per-cent hybrid of the 7-per-cent PST and 5-per-cent federal GST into two separate taxes.

But Mr. Falcon said in an interview there may be possibilities to move more quickly.

"We've left open the option of doing it faster if, by chance, the feds can move quicker than we expect or we manage to register all of the businesses much quicker or whatever might happen to allow us to responsibly move it forward faster," he told The Globe and Mail.

Some observers have advocated the quickest possible shift away from the harmonized sales tax to reduce any impediment to consumers making big purchases, leading to general economic stagnation.

Jock Finlayson, an executive vice-president with the Business Council of B.C., said his members are telling the organization it will take time to individually shift back. "It has to be done the right way. You can't do it in a half-baked fashion," he said.

Mr. Falcon took issue with suggestions by B.C. NDP Leader Adrian Dix to get rid of the tax in less than a year, possibly 11 months.

"I think that's a shocking statement if you think about the fact this apparently is how he is going to want to lead the province. Don't do your homework, just make political commitments without the benefit of facts," said Mr. Falcon, noting the opposition leader has not taken the opportunity to receive a briefing from ministry officials, who last week told reporters the 18-month timeline was reasonable.

The officials, speaking on condition of anonymity, said there are challenges re-registering 30,000 new businesses that have never worked with the PST, which was eliminated with the adoption of the HST in 2010, and rehiring staff at the provincial level to process the PST.

Bruce Ralston, the B.C. NDP finance critic, said Mr. Dix was not offered a briefing by finance ministry officials. He noted the government does not generally offer the opposition access to such briefings.

Mr. Falcon said he was not inclined to rush the process.

"We have said that we will go faster, if we can responsibly do it, but as finance minister, I am not going to rush headlong into putting back a system into place before the transitional rules are developed . . . and before the confidence that the business community has put into place changes to the computer systems and the cash registers to be able to manage the transition back into PST."

Mr. Falcon rejected the suggestion that the referendum result might constitute a material breach of Victoria's deal with Ottawa and start a six-month countdown to repaying $1.6-billion in federal transition funds.

"There's the materiality of the contract provisions themselves and what I call the political reality of the decision the public has imposed on the federal and provincial government," he said.

"The political reality is that the direction is clear and both the federal government and the provincial government are going to work as quickly as we can to enact the will of the people as expressed in the referendum."

Michael Welters, a Vancouver tax lawyer, agreed. He said the referendum does not constitute a breach, and that the next key step on the process would be an official letter from the B.C. government to Ottawa indicating the province wants out of the tax.

"In a practical sense, the federal government and the province will reach an agreement on how to pay back the money. They will just work it out in a practical manner."

Mr. Falcon is to visit Ottawa this month for talks with federal Finance Minister Jim Flaherty on the terms of repayment and how the process might work.