The Newfoundland and Labrador government is warning that reducing the harmonized sales tax may depend on another province's tax decisions.
The federal Conservative government is set to reduce the GST from six per cent to five per cent in January, which would ordinarily lower the 14-per-cent HST by a point.
N.L. Finance Minister Tom Marshall says he will lower another tax if the HST is not dropped.
(CBC)
The HST — which melds the federal goods and services tax with provincial retail taxes — is also charged in New Brunswick and Nova Scotia. It came into effect in April 1997.
But Tom Marshall, Newfoundland and Labrador's finance minister, said the HST in his province may have to stay at 14 per cent because New Brunswick is considering raising its provincial portion.
"We have an HST agreement that says that if any province wants to raise the HST, if two of the three provinces decide to do that, then the other province is dragged along," he said.
New Brunswick Finance Minister Victor Boudreau said in late October that his government is mulling a provincial increase.
If Nova Scotia also decides to raise its own rate, Marshall said, Newfoundland and Labrador would be automatically forced to increase its taxes to harmonize rates across the region.
Marshall, who said he has received nothing official from the other provinces participating in the HST arrangement, said he very much dislikes a tax change that would wipe out savings to consumers.
"We want to take government's hand out of people's pockets," Marshall said in an interview.If the HST is not lowered, Marshall said, he would consider tax relief in some other form.
"We haven't made a determination yet as to which tax it would be, but it could be income tax or possibly one of the other taxes, like the tax on insurance," he said.
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Audio
- St. John's Morning Show host Jeff Gilhooly speaks with reporter David Cochrane about whether the HST may be reduced (Runs: 5:10)
- Play: Real Media »
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