Is a two per cent cut to the HST sufficient to keep the tax reform measure alive after June’s referendum?
The B.C. Liberals are hoping so.
Announced Wednesday, along with annual rebate cheques for each child and low-income senior, the “fixes” mean all income brackets will be better off under the HST than with the old provincial sales tax structure, according to finance minister Kevin Falcon.
The current low-income rebates would continue to be paid, and $175 transition cheques would go to parents for each child under 18, and some seniors as well.
Single seniors earning up to $40,000 a year would get the entire $175, and a partial payment for incomes up to $43,500. Senior couples would receive $175 for a combined income up to $40,000 and a partial payment up to a $50,000 income.
The measures do remove much of the argument against the HST, albeit over three years, with the first one per cent cut occurring in July of next year.
Including the rebates, the impact of the HST will be largely negated for the income brackets ostensibly least able to absorb an additional tax burden.
And according to the government, the statistically average family will see an overall tax reduction of about $120 per year when the HST rate reaches 10 per cent.
In the meantime, the HST has the potential to do what it was intended to do, which is to boost the economy by reducing costs to business, and encouraging investment and job creation.
It makes little sense to return to an antiquated, multi-layered tax system – other than to “punish” the government for the manner in which it rolled out its tax reform policy.
To do so might yield superficial satisfaction for some, but eliminates the prospect of long-term economic benefit for all.