As British Columbians face the downfall of the HST, they are also looking at a hefty debt.
The province will reinstate the combined 12 per cent PST and GST tax system following the referendum, but are legally required to pay back a $1.6 billion loan to the federal government. They must also spend money setting up a PST office in the province, which could rack up the expenses to 3-4 billion, according to some experts.
Cathy McLeod, MP for Kamloops Thompson Cariboo says the $1.6 billion loan from the federal government must be paid back since it is part of a legal contract.
“We entered into a contract with the province and the province has indicated it fully intends to respect and honour the terms of the contract, which means they intend to pay back the $1.6 billion.”
She says the reaction in BC was completely different from Ontario.
“Communicating with the people you represent is absolutely critical,” McLeod says.
MP Bob Zimmer could not be reached for comment.
Shirley Bond, MLA for Prince George-Valemount says it’s about learning lessons about engaging people with new ideas.
“British Columbians said clearly they were unhappy with the way it was introduced, and we will honour the referendum results,” she says.
The federal government lent the province $1.6 billion to transition to the HST, which is legally required to be returned. Bond says there is no better time to have good fiscal management since the debt may require the government to tighten its spending.
She adds it will be done in consultation with British Columbians about how they want the government to tackle that issue.
Some critics say the referendum was more about BC voting for sound government than it was for the tax, and the government should be focussing on their approach to politics.
The transition period back to the GST-PST is expected to take a minimum of 18 months, consistent with the report of the independent panel on the HST. During this period, the provincial portion of the HST will remain in place at seven per cent. Eligible lower-income British Columbians will continue to receive the B.C. HST Credit until the PST is re-implemented. The B.C. HST credit will then be replaced by the re-implemented PST credit.