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Liberals plan to give portion of PST revenue to Feds in new HST.
BC Conservative Deputy Leader, Chris Delaney, says he believes the BC Liberal government may be planning to assign 1% of its 7% share of HST revenues to the federal government under the new “harmonized sales tax” (HST).
The source of Delaney’s suspicion is the Memorandum of Agreement (MOA) that outlines the structure of the HST. The MOA was drafted this past July, and was signed by BC Finance Minister, Colin Hansen and federal Minister of Finance, Jim Flaherty.
Delaney says the section titled “Common Tax Base” on page 3 of the MOA states, “…where Canada proposes a tax base change that would result in a reduction of more than 1% of BCVAT revenues… Canada may implement the change only if the Minister of Finance of British Columbia provides written agreement to the change prior to implementation.”
“This clause will allow the federal government the power to reduce the tax rate from BC’s portion of the HST by 1% or less without BC’s permission. They could then raise the GST by 1% in order to make up for the $1.6 Billion they are giving us,” explained Delaney. “A tax base change as described here may well mean a change in the distribution of the taxes collected from the province to the federal government.”
“What do they know that they aren’t telling us?” Delaney asked. “Why in the world would such a provision be included in this agreement if both parties were not contemplating such a move?”
Delaney says the provision helps to explain why the federal government has agreed to provide an ‘advance’ payment of $1.6 billion to BC for implementing the HST in BC.
“Once you read this provision, it starts to make sense why the feds were offering such a massive incentive to harmonize the taxes. It appears they may be planning to increase their share of the overall tax in order to get that money back, once harmonization is implemented. British Columbians will be getting bought with their own money!”
Delaney says many British Columbians were wondering why the federal government would give such a huge windfall to BC when their own coffers are bare and going into deficit.
“Nobody believed they were doing it out of the goodness of their hearts. We may now know the real reason why. We have sent a request to Finance Minister Hansen asking for clarification of this matter. In the event he denies his government has any intention of giving up a 1% point to the federal government, we have asked whether he is prepared to guarantee this to the BC public to reassure them that they will not be giving even more of their own money to the federal coffers in order to have a tax they already hate,” said Delaney.
The BC Conservative Party has developed a position paper opposing the HST, which can be found on their web site at: http://www.conservativesbc.com
Port Coquitlam
September 15, 2009
BC Conservative Party
