B.C. has five years to repay HST transition funding
British Columbia has been given five years to repay the $1.6 billion in transition funding supplied by the federal government for implementing the harmonized sales tax.
Ottawa has also agreed to waive any interest charges for the agreed-upon payment period, Finance Minister Kevin Falcon announced Wednesday.
The deal means B.C. will save about $118 million in interest the province would have incurred by borrowing the full amount this year, he added.
"It's a real win for British Columbians," Falcon said. "Obviously in a perfect world I wish we didn't have to pay back anything, but the referendum decision was clear."
The government plans to pay back $320 million per year, but the full $1.6 billion will appear on the books for the 2011-2012 fiscal year.
The minister refused to speculate about where the government will find the annual payments, but said no programs were off-limits.
"Obviously when you go into a budget, everything is on the table. You have to look at everything," he said.
But Falcon suggested it was unlikely that tax increases, either business or personal, would be used to generate extra revenue.
The province still hopes to balance its books by the 2013-2014 fiscal year.
The HST transition funding was distributed to B.C. in tranches, and the fate of the controversial tax had already been sealed by the time the province received the last installment of about $500 million, he added.
More than 1.6 million voters chose to scrap the HST in a mail-in referendum last year. The province will eventually return to a GST/PST system, though the transition process is estimated to take until 2013.
The shift involves rehiring up to 300 government employees and getting more than 100,000 businesses' computer software switched over, according to the minister.
"We're moving as fast as we possibly can," Falcon said.