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May 16, 2011

Excess HST Revenue

I think that most people have their mind made up about the HST and know how they will vote in the referendum. $7 million in government ads is more likely to create a backlash than change votes. Families can look at their own budgets to see how the tax affects them; they don't have to try to find the truth in a bewildering barrage of conflicting statistics. At the BC Liberal convention Christy Clark promised to “fix” the HST while staying within her balanced budget commitments. She must think her tax is broken, but she hasn't provided a list of what problems she intends to fix.

The Dinning panel reported: “The HST is raising more revenue in its first year than was predicted. With each passing year, the HST will continue raising more revenue than the PST/GST system did because it taxes a broader base of goods and services. If we go back to the PST/GST, the province would see a sales tax revenue loss of about $820 million in the first year. That loss would increase to $893 million in the second year and would widen each year.”

The panel didn't mention which fiscal year its $820 million figure applies to but 2013-2014 is probable since it said it would take 18-24 months to return to the PST/GST. The panel was also not clear on whether the excess HST revenue was before or after various rebates and credits.

The budget documents tabled by Falcon show an increase in projected gross HST revenue of $315 million for 2011-2012 and $335 million for 2012-2013 compared to the projections for those years in the 2010-2011 budget. This year's budget projected total gross HST revenue as $8.068 billion for 2013-2014, an increase of $422 million from 2012-2013. That’s normal growth, not an increase in the excess that was shown when comparing the previous budget estimates.

Dinning says the excess HST revenue is over $800 million, while Finance documents put it closer to $300 million. It looks like there is a difference of at least a half billion dollars between the Dinning report and the figures in Falcon's budget. A revision of that magnitude should have been reported to the legislature when Falcon re-tabled the budget documents on May 3rd.

When Christy Clark produces her proposed fixes for the HST, perhaps she could also produce a reconciliation of the HST figures between Finance and Dinning. If the Public Accounts for the last fiscal year are made public on July 8, as they were last year, most people will have already marked and returned their referendum ballot.