World - BC Estimates $2.3 Billion Cost To Revert To Provincial Sales Tax

BC Estimates $2.3 Billion Cost To Revert To Provincial Sales Tax
Vittorio Hernandez

Vancouver, British Columbia, Canada

British Columbia residents would have to tighten their belts for the next three years following their decision to scrap the harmonized sales tax (HST) in the province. BC Finance Minister Kevin Falcon said on Thursday that the Canadian province's return to the provincial sales tax (PST) would cost the government $2.3 billion by fiscal year 2013-14.

The projected loss includes paying back to Ottawa the $1.6 billion the federal government made in 2010 in exchange for the province collecting the 12 percent HST, which combined the PST and the general sales tax.

Falcon forecast that for the first year, BC would suffer a budget deficit of $2.8 billion, followed by another $805 million the second year and $458 million the third year.

The large budget gaps would also result from the impact of the global economic slow down, particularly felt in Western nations.

To close the budget gaps, Falcon said the provincial government is open to tax hikes, but it is not the first option. He explained that the defeat of the HST in the recent referendum in the province is an indicator that taxpayers are not willing to shell out more money to the government.