News Release Archive
FINANCE--HST PROCEEDING WITHOUT TAX-IN PRICING ----------------------------------------------------------------- The HST will come into effect April 1 as planned, but without tax-in pricing, Finance Minister Bill Gillis said today. Events this week left Nova Scotia and the House of Commons as the only advocates of tax-in pricing. On Monday, New Brunswick served notice that its position had changed, and on Tuesday, the Senate banking committee recommended an amendment removing tax-in pricing from the HST legislation. Tax-in pricing had been included in the bill when it left the House of Commons. Federal Finance Minister Paul Martin said he is leaning towards accepting the Senate amendment to ensure harmonization begins April 1. "It is unfortunate because consumers have said consistently they want the tax included in the price tag. People want to know how much an item costs before they get to the cash register. We still support it," Dr. Gillis said. When the HST agreement was signed last spring, the four governments - Nova Scotia, Newfoundland, New Brunswick and Ottawa - all agreed to tax-in pricing. In recent weeks, in the face of an intense business lobby against tax-in pricing, New Brunswick changed its position and the Senate amended the HST bill. In the interest of getting on with harmonization, the federal government has said it will pass the amended bill, effectively killing tax-in pricing. "Tax-in pricing was difficult but workable when three provinces were involved. It would be impossible for Nova Scotia alone to impose a tax-in pricing law on its retailers," Dr. Gillis said. Nova Scotia remains committed to the HST, which will become effective April 1, because, the minister said, tax harmonization will bring significant benefits to Nova Scotians. Prices on the majority of items are going down. In terms of impact on consumers, he said, most will pay about the same amount of sales tax after March 31 as they do now. "Tax on some items goes up, while tax on more items goes down. For most consumers it will balance out. But the real benefit from harmonization is the boost it gives Nova Scotia's economy. It will reduce business costs, and make business and industry more competitive. That will mean growth and new jobs in the Nova Scotia economy," Dr. Gillis said. "I want to remind people that this is part of a total package of tax changes which includes a drop in the provincial income tax rate in July and two programs to help low income Nova Scotians. Those tax cuts total more than $53 million." The 15 per cent HST replaces the 11 per cent provincial sales tax and the seven per cent GST, which combined (and stacked) resulted in an effective tax rate of 18.8 per cent on many items purchased in Nova Scotia. However, the HST is applied more broadly than the PST, so the tax on some goods and services will increase from seven per cent to 15 per cent. The sales tax change amounts to a $100 million a year tax cut in Nova Scotia. Because of that loss in revenue, the federal government is providing Nova Scotia, and the other harmonizing provinces, with transition funding, in Nova Scotia's case, of about $249 million over four years. -30- Contact: Steve Warburton 902-424-3522 trp Mar. 12, 1997 - 2:35 p.m.