The P.E.I. government did not get the support it was hoping for from the Canadian Federation of Independent Business after a debate in the legislature on the new harmonized sales tax.

Wes Sheridan

Finance Minister Wes Sheridan was expecting stronger support from the Canadian Federation of Independent Business on the question of HST and the economy. (CBC)

The Opposition Progressive Conservatives argued during question period the HST, introduced in April, hasn't been the boon for business government claimed it would be.

At one point Finance Minister Wes Sheridan pointed out Erin McGrath-Gaudet from the Canadian Federation of Independent Business, seated in the gallery, and said he expected she would speak "very heartily" to what the HST has done for many of the small business owners who are CFIB members.

After the debate, McGrath-Gaudet provided her own thoughts.

"Certainly what we've seen with HST is the immediate impacts are not necessarily the positive ones," said McGrath-Gaudet.

"This is taking money out of the economy. I mean, it's an extra $25 million into government revenues every year. So people are seeing less money in their own pockets, and that hits right away."

Other Canadian jurisdictions that have introduced the HST have done it in a way that is revenue neutral, that is, the tax rate was set so that the government received the same amount of sales tax revenue. P.E.I.'s formula for the new tax added significantly to government revenues.

McGrath-Gaudet said given that tax increase the business benefits from the HST will take longer to sink in. She added the tax has already significantly reduced the amount of paperwork business owners have to do to submit their taxes.