New Brunswick braces for 2% HST increase

A provincial poverty advocate is worried about how an increase in the harmonized sales tax is going to affect people with low incomes.

Poverty advocate worries those on social assistance, fixed incomes can't afford to pay tax increase

Roger Melanson announced the 2 per cent HST increase in his 2016 budget, estimating it will bring in $300 million for the province. (CBC)

A provincial poverty advocate is worried about how an increase in the harmonized sales tax is going to affect people with low incomes.

On Friday, the HST will increase from 13 per cent to 15 per cent and Jean-Claude Basque of the New Brunswick Common Front for Social Justice says financially vulnerable people can't afford the increase.

"It's the working poor, people on social assistance, seniors — everybody that's on a fixed income. So any increase has a bigger impact on them than somebody who's making $90,000 or $100,000 a year," said Basque.

Jean-Claude Basque of the Common Front for Social Justice says if the Gallant government goes ahead with the ideas in the strategic program review, rural New Brunswick and people living near the poverty level would suffer most. (CBC)
"It's also on electricity, on the telephone, on any services," he said. "If you need a carpenter, it's all these services that are taxed and people are using it a lot so … it's certainly an added cost."

On Monday, the Energy and Utilities Board of New Brunswick approved a 1.63 per cent increase for power rates, also scheduled to take effect Friday, pending EUB approval of NB Power's revised rate schedule.

Basque says it's just one more hardship for people on social assistance, as the basic social assistance rate has been unchanged for two years.

"They're really stuck because their purchasing power has decreased in the last two years," said Basque. "And then we're adding the HST and we're adding also [an] increase in electricity costs."

Seniors concerns

The New Brunswick Seniors Federation has similar concerns.

"It's going to hurt," said president Leonard LeBlanc. "They're going to have to make decisions: `Do I buy groceries or do I buy my medication or do I pay my electric bill?'"

"I know the government — the province — is in bad shape financially, but they got nobody to blame but themselves and I'm talking both sides," he said.

Businesses prepare

Businesses are getting ready for the change.

John Chandler owns the Terra Verde furniture store in Moncton and says his cash register will be ready to ring up the increased HST beginning Friday.

John Chandler of Terra Verde furniture store in Moncton doesn't think the 2 per cent HST increase will deter people from making major purchases. (Kate Letterick/CBC)
"That's been the very easy part. It's just a couple of clicks on the computer to change the tax rate and in that way we're good to go," said Chandler.

He says the increase has brought in more business this week.

"We've had a few customers that had some larger purchases in mind that definitely got in this week to pay the balance or pay for the orders to make sure they didn't have to pay that extra two per cent," Chandler said.

No one wants a tax increase, he says, but he doesn't think it will affect some people's decision to buy.

"We'll probably still buy what we want."

Tax credit help

The provincial government says there are measures in place to help offset the cost of the tax increase.

New Brunswickers who qualify will be eligible for a provincial harmonized sales tax credit.

The full HST credit will be provided to individuals and families with incomes of less than $35,000 per year, according to the province.

Individuals with an income of less than $50,000, and families of two adults and two children with a combined income of less than $75,000, could also receive some credit.

The tax credit could hand back $300 to individuals, $300 for a spouse or partner and $100 per child under the age of 19, officials have said.

Single parent families can also receive a $300 credit for their first child under this new system.

The HST increase will mean about $300 million in revenue for the cash-strapped provincial government.

Basque said it will take some time to see how people will be affected.

"The good part of it is when you compare our rebate to other provinces it's better," said Basque. "But we'll just know in about one year's time what's going to be the real impact when people get the rebate and see how much they're spending."

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