P.E.I. HST increase cause for concern for business community, advocates

An increase in the HST on P.E.I. announced in the budget speech Tuesday has been met with criticism from groups representing the business community, and social advocates.

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Finance Minister Allen Roach said the HST will move to 15 per cent from 14 per cent on Oct. 1. That will make the tax the same as it is in New Brunswick and Nova Scotia.

HST increase removes P.E.I.'s retail advantage, says Retail Council

"Some of the retail advantages that P.E.I. had just a few years ago with relation to, with comparison to, its neighbours in New Brunswick and Nova Scotia, those no longer exist," said Jim Cormier, the Atlantic director of the Retail Council of Canada.

"Not to mention, the HST is a flow through tax. It's not a tax specifically directed at business. It's you as the consumer. You're going to be paying more. So it does have an impact on consumer confidence."

Cormier said the council believes the government could have done more to improve efficiency in the government, instead of increasing government revenue.

Tax increase could 'set the economy back'

The Greater Charlottetown Area Chamber of Commerce had a mixed reaction to yesterday's provincial budget.

It applauds the province's efforts to reduce the provincial deficit, but said the increase to the HST was disappointing for the business community.

"One of the things that is of concern is that the increases in tax rates will set the economy back and limit opportunities for business to expand the tax base," said Executive Director Penny Walsh McGuire. "The risk is that Islanders will be forced to shop elsewhere or look online for lower prices."

Walsh McGuire said the chamber is pleased with the province's support for increased entrepreneurship

Tax changes aimed at low-income Islanders

The government also introduced three measures aimed at reducing taxes paid by low-income Islanders.

• An increase in the basic personal amount for income tax, from $7,708 to $8,000.
• A $50 increase in Low Income Tax Reduction
• A 10 per cent increase in the sales tax credit.

Cormier said the council has been asking province to raise the personal income tax exemption for years.

The P.E.I. chapter of the Canadian Federation of Independent Business is also pleased to see the increase.

P.E.I. director Erin McGrath-Gaudet said the CFIB has also been after the government to raise that exemption, which has been unchanged since 2008.

"We're still the lowest in the country. It's not a huge increase on that front, but it's important movement that we haven't had for a lot of years," said McGrath-Gaudet.

"Particularly when they're going and increasing the HST, to see them also increase that basic personal amount, so that's the amount people get to keep tax-free, that that's certainly encouraging as a bit of an offset."

The Council of Canadians said those measures won't off-set the HST increase for low-income families.

"Everybody is going to be paying close to $400 more and that means low income islanders will pay proportionately much greater," said Leo Broderick.

He said any relief those measures will offer is clawed back by the HST increase at least threefold.

The tax changes are not revenue neutral. The HST increase will raise about $22 million a year for the province, while the other tax initiatives will cost about $3.9 million.

The government is estimating a $9.6 million deficit this year, and a 9.2 million surplus in 2017-18.

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