Budget questions for new premier

Finance Minister Colin Hansen presented a “status quo” budget Tuesday that he described as leaving a recovering B.C. economy for the next premier.

Finance Minister Colin Hansen presented a “status quo” budget Tuesday that he described as leaving a recovering B.C. economy for the next premier.

When the successor to Premier Gordon Campbell is sworn in early in March, it will fall to him or her to decide if carbon taxes will continue to rise and small business taxes will be eliminated next year as planned. But the most significant decision of 2011 will be made by voters directly – to keep the harmonized sales tax or go back to the old provincial sales tax.

In his budget speech to the legislature Tuesday, Hansen warned of “major implications” that go beyond the return of $1.6 billion in transition funds to the federal government.

“The fact is, no province has ever backed out of the HST after implementation,” Hansen said. “Being first would put us into uncharted waters.”

Hansen said he could not put a figure on the overall costs of scrapping the HST, although it would include repaying $1.6 billion in transition funds to the federal government and reconstructing a provincial sales tax department at a cost of $30 million a year.

NDP finance critic Bruce Ralston said if the government really doesn’t know how much a rejection of the HST will cost, it is a “colossal failure” to prepare for that likelihood.

“But I think they do have an idea,” Ralston said. “They’ve chosen to hide that from British Columbia for tactical purposes as they face a referendum, which I think in their heart of hearts they still figure they can succeed on.”

B.C. Chamber of Commerce president John Winter said business groups that opposed the HST have softened their criticism. Businesses are starting to see the savings from simpler collecting and filing of sales taxes, and many are gearing up to promote those benefits before a referendum on the HST.

“To go back to the old system would be very difficult,” Winter said.

The latest finance ministry projection is that B.C. will finish the fiscal year March 31 with a deficit of about $1.3 billion, down from $1.7 billion estimated a year ago. That recovery is driven by better than expected corporate tax revenues, which plunged following the world recession of 2008.

Vernon Morning Star

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