HST reaction mixed on P.E.I.

The coming of a harmonized sales tax is drawing mixed reaction on P.E.I., but few are coming out in unequivocal support for it.

Finance Minister Wes Sheridan announced in his budget speech Wednesday that the HST would be introduced April 1, 2013. The provincial portion of tax would be lowered to nine per cent for a total tax of 14 per cent. The tax is expected to raise another $25 million a year by broadening the range of goods that are taxed.

The province will also introduce an enhanced rebate program - $150 to $200 a year for households earning under $55,000.

Sheridan said not only will the sales tax be lower on 75 to 80 per cent of items for sale in the province, the experience in other jurisdictions has been that base prices go down, because businesses are rebated taxes on expenses.

'Prices were lowered, everyone did benefit.' — Leanne Hache, Canadian Federation of Independent Business

The HST was introduced in Nova Scotia and New Brunswick in 1997, and a survey by the Canadian Federation of Independent Business found that its members did lower prices.

"This is one of the positive benefits of introducing the HST," said CFIB spokeswoman Leanne Hache.

"Prices were lowered, everyone did benefit. I think looking to what's happened in the region would be a great test case for Islanders to see whether or not this is a good thing for them."

Hache said the majority of her members are in favour of the harmonized sales tax because it cuts down on paper work and increases tax rebates.

Hache did say some businesses were concerned about having time to change over their cash registers before April 2013.

The Opposition Progressive Conservatives want to learn more about how the HST will be introduced before taking a position, but finance critic Steven Myers attacked the government on the reason for introducing it now. He said it was forced on the Liberal government because of reckless spending.

"Instead of ensuring that they paid the bills, so that programs would not have to be cut and workers would not have to be fired, they spent it like there was no tomorrow," said Myers.

PC Leader Olive Crane said the government had better be ready for some hard questions.

"This is a tough budget for Islanders," said Crane.

"It's going to be a long, hot spring in the legislature."

 A 'backward' tax

The government is taking the wrong path when it comes to taxation, said Green Party Leader Sharon Labchuk.

"The HST is a really backward way to go," said Labchuk.

"We need to target the taxes, and you can't do that with the HST."

Labchuk would like to see higher taxes on items bad for the economy and the environment and lower taxes on beneficial items.

"Bad things like pesticides and chemical fertilizers … right now are not taxed provincially whatsoever, so it's a very regressive and backward tax," she said.

NDP Leader James Rodd said the tax would be hard on lower-income Islanders, with goods and services that were previously exempt from provincial tax – such as realtor fees and commissions, surveying costs, child care services - seeing a new nine per cent increase in cost to the consumer.

"Islanders are being taxed more and more with this government. That HST is now going to be part of the Island way of life," said Rodd.

"Everything is open now for a tax. If people felt they were overburdened before, think again, because it's just going to get worse."

Farm groups split

The P.E.I. Federation of Agriculture was pleased to see the announcement of a tax it has been lobbying to have for years.

President John Jamieson said the HST will save farmers thousands of dollars a year.

"We've been asking for HST since 2007. It's a huge improvement for agriculture on Prince Edward Island," said Jamieson.

"Our studies have shown that the average farm is leaving behind a little over $13,000 a year, and you couple that, since '97 when it was in place in New Brunswick and Nova Scotia, that's almost $200,000 over that period that our farms have left behind. So this is a big announcement for agriculture."

But Edith Ling of the National Farmers Union said farmers need to take a broader view.

"The HST might help a little bit but farmers have to realize that we're consumers too," said Ling.

"Where these increased taxes are going to be for the average consumer on the street it's going to hit farmers too.

Mary Boyd of the Coalition for Poverty Eradication agreed that, even with the proposed rebate, the HST will be hard on many.

"It becomes a tool to fight the deficit on the backs on low and medium-income people," said Boyd.

"Anybody earning $80,000 or below I think will pay more than their tax share and those above will pay less."

Sheridan said the HST will help the province balance its budget by 2014-15.