HST hike would hurt already-struggling P.E.I. economy, says Taxpayers Federation

A one-per-cent increase in P.E.I.'s HST would punish working taxpayers, says the Canadian Taxpayers Federation in advising the provincenot match the 15% ratein Nova Scotia and New Brunswick.

Atlantic spokesperson Kevin Lacey said the average worker on P.E.I. is already struggling with the rising cost of food, and increasingthe harmonized sales tax would only make that worse.

"The one per cent doesn't sound like a lot," said Lacey, "but when you add that one per cent on to just about every single thing that you buy, it really starts to add up."

Lacey believes an increase would harm the already struggling P.E.I.economy.

"That's money out of your pocket at a time when working taxpayers are not seeing the kind of wage growth and the prices of things are suppressing ourability to spendmore money."

'The taxpayer is tapped out'

UPEI economist Jim Sentence told CBC News last week that heestimateda one-per-centincrease would raise around $28 million for the provincial government.

Finance Minister Allen Roach told CBC News no decisions have been made as the pre-budget consultations arejust beginning.

Lacey hopes the P.E.I. government doesn't look to the HST in the hopes of balancing the books.

He said Nova Scotia increased its sales tax six years ago as a way to balance the budget, but the province has continued to run a deficit proof, according to Lacey, that the strategy doesn't work.

"It's almost like they think that the taxpayer is a tap that they can keep getting revenue from that will never turn off, but the taxpayer is taxed out," said Lacey.

P.E.I. should keep lower HST as competitive advantage

At 15 per cent, Nova Scotia and New Brunswick now havethe highest sales tax in Canada.Lacey argues the P.E.I. government should keep its HST at 14 per cent as a draw.

"Why would the Island give up its competitive advantage now when it's a lower tax rate than the other two Maritime provinces?" said Lacey.

"It should take advantage of that opportunity rather than giving it up."

He said HST harmonization in the region would cut a little bit of red tape for businesses that operate in more than one province, as those businesses could submit one HST report a year rather than multiple reports.

But Lacey believesthenegativesoutweigh the possible benefits.