People wanted exemptions, but the Liberals gave them cuts instead.
After consulting with British Columbians in telephone and live town halls, the Liberals knew they had to make changes, but they were not willing to give exemptions.
With the range and number of requested exemptions they would require too much bureaucracy and cost to implement, so a rate reduction was the best option, according to Nechako Lakes MLA John Rustad.
While the recent independent review of the HST showed there was an impact to families, Rustad said the tax is still worth saving, if the impact can be mitigated.
“For me the key thing with HST is how it will help support our resource sectors,” he said. “So the hope is that people will look at this reduction, forgive us for the way this thing was implemented and look at the benefits that the HST will bring for our resource sectors.”
Because the resource sectors are supporting the HST, he feels it is important to keep the tax and focus instead on decreasing the impact to families.
The Liberals are therefore proposing a reduction in the rate of the HST by two per cent, implemented over the next three years, with a one per cent drop in 2012 and another per cent drop in 2014.
While Rustad said they would like to be able to put the decreased tax into place sooner, the agreement they have with the federal government means they can’t do anything until 2012.
But in order to give relief to some in the short-term, there will be “transition cheques” of $175 per child for families and $175 for seniors with household incomes below $40,000.
The decrease in the HST will impact revenue for the province, and Rustad said this will be offset by changes to their planned changes to business taxes.
Corporate tax rates were supposed to drop to ten per cent, but will instead stay at their current twelve per cent.
Small business tax rates will also freeze at their current 2.5 per cent instead of dropping to the proposed zero per cent the Liberals had promised.
Rustad said the changes will still keep the Liberals in line to balance the provincial budget by 2013-14 as legislated.
But the NDP deputy finance critic Doug Donaldson and MLA for Stikine is not so sure.
He said the balanced budget is predicated on a projected economic growth rate of four per cent, two per cent above what the Conference Board of Canada is predicting.
According to the Conference Board, the B.C. economy is in a lull and will only be growing by a more modest two per cent.
This, according to Donaldson, will impact any future government’s ability to provide services and programs in the province.
Donaldson said the province will effectively lose billions of dollars in revenue.
“I think those billions are going to hamstring the province in the future and families are going to be paying for the BC LIberal government’s deceitful behaviour on the HST for years to come,” he said.
Donaldson points out Premier Clark’s own comments on the HST in which she said reducing the HST by a point or two before the referendum would be seen by taxpayers as “buying them with their own money.”
“I think that show a lot of contempt for the citizens of the province,” said Donaldson.
Donaldson seemed unsure the Liberals could offer any reforms which would satisfy critics of the HST.
“The BC LIberals created this mess and now they’re trying to save it … so they’ve actually got no credibility left on what the best tax system is,” he said.
“The HST is a permanent tax shift onto the backs of consumers … so it’s a regressive tax in that sense.”