There is no doubt the NDP will take some heat over the increase to the provincial take of the HST. That detail commands most of the attention in Tuesday’s budget release.
The question remains whether most people take a close look at how much it might affect them. They might also ponder alternatives – considering the budget’s focus is widespread and includes cuts in such areas as a gradual reduction to the civil service. There will also be wage restraints and a cap on pension earnings – bound to bring grumbling from that sector.
No one likes paying taxes, and nearly everyone bristles when they are increased. The NDP will be reminded of this particular hike many times during their tenure.
However, they did also include suggestions from finance meetings across the province to provide a cushion for lower income families. Thus, similar to the GST rebates, a household bringing in less than $30,000, for example, will get about $240 back.
They’ve also removed the provincial tax on items such as children’s shoes and clothing.
Looking at the arithmetic, purchasing a $100 item will cost an extra $2. A $20,000 car would mean $400 more spread over the payments. Some will find that a significant increase.
Did consumers notice a great difference in the reduction – twice, one per cent at a time – in the federal GST in the past several years? Putting the change in reverse, they’ll pay a lot more attention.
Certainly business owners have reason to be nervous. If this does, as some suggest, significantly slow down sales or cost jobs at a time when the economy is slowly warming up this remedy could be seen to have backfired.
There will be anger, no doubt. Will it last? Certainly for some.
But the debt can’t be allowed to continue growing. Servicing it is already a huge drag on provincial finances.
We’ll see how good a money managers the NDP are if their forecasts are accurate and they wrestle an unwieldy deficit under control by 2013-14. Some will feel only the tax pain, but the fiscally conscious will be interested to see whether this management works.