The independent panel reviewing the impact of B.C.’s harmonized sales tax has concluded that it increases prices for 17 per cent of an average family’s purchases, totalling $350 a year.
The panel was appointed by the B.C. government as part of preparations for a mail-in referendum on the HST that begins in mid-June. The panel released its report last Wednesday, after a delay to avoid release during the federal election.
It finds that the B.C. government is getting more revenue than it expected in the first year of the HST. The finance ministry’s initial projections were that rebates for low-income families, home energy use and other exemptions would make the tax revenue neutral in the early years.
The report concludes that going back to the former provincial sales tax would cost the province $820 million in the first year, $893 million the second year, with the amount increasing in subsequent years.
One reason is that the imposition of the HST hasn’t deterred spending as expected.
The report notes that while restaurants reported a drop in sales when the HST increased taxes by seven per cent in July 2010, that is not borne out by Statistics Canada measurement. It found that between June 2010 and January 2011, restaurant industry sales increased three per cent in B.C., the same as the national increase over that time.