Editorial — Good and bad news
There is both good news and bad news in the latest financial figures from the provincial government.
The final numbers for the 2010-11 fiscal year, which ended on March 31, show that the province ran a deficit of $309 million — much lower than projected. This is due partially to strong economic growth and additional tax revenue, but it is also due to a large payment from Ottawa of $769 million.
This payment is related to the decision to implement the HST, which has yet to be ratified by voters. If it is turned down, that money will have to be paid back.
Sales taxes brought in more than $5 billion, with $4.176 billion coming from the HST, which went into effect on July 1, 2010.
Finance Minister Kevin Falcon said that it will cost the province about $3 billion if the HST is rejected by voters. Only some of that number can be quantified — the only known figure is the $1.6 billion transition payment from Ottawa which will almost certainly have to be paid back.
NDP finance critic Bruce Ralston sees Falcon’s remarks as an elaborate spin job by the BC Liberals, and he is at least partially correct. The government has consistently quoted a plethora of figures showing how the HST is good for the province, yet these are mainly estimates by economists — not hard figures.
The good news about the 2010-11 fiscal year is that the deficit was lower than expected. Yet the bad news is that another $3.3 billion has been added to the provincial debt, which now stands at more than $45 billion.
It is obvious, but remains unsaid, that the HST is a cash cow which the Liberals see as closing the fiscal gap and bringing about an eventual surplus. They may even use some of its proceeds to pay down the debt, should they get that chance.
The NDP, on the other hand, opposes the HST and wants the provincial sales tax to come back. Whether it would raise as much money is uncertain. Yet the NDP must eventually give definite answers as to how they would balance the books.
The party may well form the next provincial government.