HST takes effect on P.E.I.

After months of debate and protest, people on Prince Edward Island are now paying harmonized sales tax on some goods.

Price of gas, electricity, adult clothing jump with implementation of harmonized sales tax

Motorists on Prince Edward Island jammed gas stations on Sunday to beat the harmonized sales tax, which comes into effect April 1. 1:49

After months of debate and protest, people on Prince Edward Island are now paying harmonized sales tax on some goods.

The total tax in the province is actually decreasing from 15.5 per cent to 14, but it will mean an increase for certain commodities.

The switch to HST was announced in last year’s budget.

The new tax had many Islanders racing to the pumps Sunday, trying to get a last drop of fuel for their vehicles before gas prices jumped nine per cent.

"Nobody likes to pay more," said Hans Connor, who lined up at a Stratford gas station Sunday. "But I know it goes for something useful so that helps when I have to pay more."

The provincial government said it had to make the switch to help pay down the debt.

"The decision to overhaul our outdated system of taxation was not taken lightly," Finance Minister Wes Sheridan said last week. "I appreciate the willingness of Islanders to fully debate and understand the implications of the harmonized tax. While the policy is controversial, government remains confident that this measure is needed."

The province will receive a one-time payment of $39 million from the Federal government, which will be put on the provincial debt.

It will also add $30 million to provincial coffers every year.

Many P.E.I. residents remain unconvinced that the move was necessary. They questioned how it would change their bottom line.

"They already collect a lot of taxes on P.E.I.," said Trevor Darrach. "I think they should look at other way of thinking about the common person instead of lining their pockets."

Some exemptions

Not all products saw overnight price increases. Groceries and children’s clothing are exempt from HST. The P.E.I. government is also bringing in an income tax rebate for low income families.

But HST is expected to take a bite out of the English Language School Board’s budget. It will cost the board an estimated $573,000 this year, according to Superintendent Cindy Fleet. The province is not offering tax rebates for boards, as other provinces do.

That number differs from government estimates, which project that the extra tax the board will pay on electricity, school supplies and diesel for its buses will be offset by savings on items where the tax goes down.

Fleet said she still has to submit the board's numbers to the province. She doesn't know if the board will get any more money than what was included in the budget last week.

"We will be asking that question in a briefing session that we will have regarding the particulars of the budget."

In last Wednesday's budget, P.E.I.'s English and French school boards received an extra $1 million, half a per cent more than last year. Without extra money, the HST will eat up most of that increase.

Budgets change

Meanwhile, Health PEI said it will pay an extra $5.62 million under the HST. In an email to the CBC, a spokesperson said that money was included in the $16 million in additional funding the agency received last week, although there was no mention of that in the budget.

That leaves the agency with just a $10 million increase for programs this year — less than two per cent over last year.

Just like homeowners, the agency is now paying more for things such as electricity, and fuel.

Opposition critic James Aylward said Health PEI and Island school boards should be receiving full HST rebates.

"We already know our school systems and our health care system here on P.E.I. is struggling just to keep up," he said. "If you levy the HST against those departments, it’s just going to cripple them further."

Some charities also shared concerns that while their costs will rise, they're receiving the lowest HST rebate in Canada.