The B.C. government made its first move Thursday to soften the blow of its proposed harmonized sales tax by offering improved rebates to some new home buyers, but British Columbians can forget about Ontario-style $1,000 HST rebate cheques.
Finance Minister Colin Hansen said he's not about to match the Ontario government and its plan to offer $1,000 cheques to families to ease the burden of the new harmonized tax, but he suggested more changes are in the works in British Columbia.
"Somebody asked me early on in the process: 'Are we prepared to match the new tax rates that Ontario has brought in?"' he said. "And the answer is, if we were to do that we would have to increase all of our tax rates."
Hansen said tax rates in British Columbia are lower despite Ontario's moves to lessen the impact of the HST.
Hansen said he is meeting with the representatives of the B.C. restaurant industry about the HST. The food-service industry is bitter about the HST, saying the tax adds seven per cent to every meal they serve.
On July 1, 2010, B.C. will harmonize its seven-per-cent provincial sales tax with the five-per-cent federal goods and services tax, creating a 12-per-cent HST, the lowest in Canada.
The Ontario HST adds up to 13 per cent.
"We've been listening to various sectors," said Hansen. "We indicated right from the beginning that we were quite prepared to look at issues around mitigation in various sectors that were impacted by the HST.
"This is proof that we've been listening, and we're prepared to make some changes," Hansen said.
The HST change announced Thursday increased the threshold for new home buyers to get a rebate on the provincial portion of the HST. Hansen said the new housing rebate on the harmonized sales tax will increase to $525,000 from $400,000.
He said the move represents the highest maximum provincial rebate in Canada. It means home buyers will be eligible for a rebate of 71 per cent of the provincial portion of the HST paid on a new home, up to a maximum of $26,250.
Buyers will receive a flat rebate of $26,250 on homes worth more than $525,000.
The Opposition New Democrats, who have been calling on the government to dump the HST completely, said the home buyers' rebate does little because the average price of a home for much of British Columbia is more than $600,000.
"The government's trying to put lipstick on a pig," said New Democrat finance critic Bruce Ralston. "This is, I think, a response to public pressure from the homebuilders association. They've asked that the threshold be raised to $600,000."
Ralston suggested that if B.C.'s real estate market continues its current upward trend in times of low interest rates and a sagging economy, few British Columbians will be eligible for the rebate by the time the HST law takes effect in July 2010.
A spokeswoman for the Canadian Homebuilders Association British Columbia said the organization that represents more than 1,700 B.C. companies was looking for a threshold number more in the $600,000 area, but the increase signals a start to more changes.
"We will over the next two years continue to compile empirical data that demonstrates that $525,000 is still not a large enough ceiling," said chief executive officer M.J. Whitemarsh.
She said the homebuilders want the government to increase the HST threshold, index future threshold increases to the housing price index and offer consumers a provincial renovation tax credit similar to the renovation tax credit currently being offered by the federal government.
Dennis Pilon, a University of Victoria political scientist, said while Ontario and British Columbia attempt to sell the HST to its residents, the federal government is carefully watching events unfold.
The HST is a federal creation and with the Stephen Harper Conservatives looking for opportunities to win a majority government, the HST is becoming a major political stumbling block, he said.
"The HST thing has got an impact in Ontario and in B.C., two provinces that they really need to clean up in if they are going to get to a majority government," said Pilon.
"I imagine the Conservatives are very worried."
