PEI·Analysis

How much will P.E.I.'s HST increase dig into your wallet?

​The cost of living on P.E.I. is expected to increase by about 0.5 per cent as a result of a one percentage point increase in the HST coming into effect on October 1, according to government documents obtained by CBC News through a freedom of information request.

Government documents put value on tax sting coming when HST increases to 15 per cent in October

Most Island households will end up paying more even after tax reduction measures introduced to help offset the increase in the HST are taken into account, government documents show.

​The cost of living on P.E.I. is expected to increase by about 0.5 per cent as a result of a one percentage point increase in the HST coming into effect on October 1, government documents show.

The P.E.I. Department of Finance documents were obtained by CBC News through a freedom of information request.

The documents show most Island households will end up paying more even after tax reduction measures introduced to help offset the increase in the HST are taken into account.

According to the documents, increasing the HST from 14 to 15 per cent is expected to lead to a 0.544 per cent increase in the P.E.I. consumer price index when spending on all items, both taxable and non-taxable, is taken into account.

That will increase costs for Island households anywhere from $109 to $435 per year, according to the range of calculations provided by government.

Annual household HST increases

Annual household expenditureIncrease in HST paid
$20,000$109
$25,000$136
$45,000$245
$80,000$435

Still spending more

The province introduced an increase in the basic personal income tax exemption, an increase in HST credits provided to low-income households and changes to the province's low income tax reduction program. (iStock)

Offsetting the increase in the HST rate are a number of tax fairness measures introduced by the MacLauchlan government in its 2016 budget.

The more money in people's pockets, the more they'll spend. By taxing these people there's just nothing left.— Opposition economic development critic Matthew MacKay

Those include an increase in the basic personal income tax exemption, an increase in HST credits provided to low-income households and changes to the province's low income tax reduction program.

According to the documents, those changes will more than make up the difference for some low-income households.

But for most Island households the tax reductions won't add up to the extra they'll spend under a 15 per cent HST.

Value of tax fairness measures
Low Income ($20,000)Middle Income ($45,000)High Income ($80,000)
Single Person$88$43$28
Single Parent$192$97$77
Two-earner couple$162*$72$52

(Note: The documents define the low-income level for "two-earner couple" as $25,000. The table is calculated based on income, not household spending).

Give money back to Islanders says Opposition

Opposition economic development critic Matthew MacKay says the tax fairness measures don't go far enough. (Andrew Vaughan/The Canadian Press)

Some forms of income aren't taxable, including social assistance benefits and disability support payments, which means Islanders who rely on those sources of income may not receive the full benefit of the new tax fairness measures, but will be impacted the same as everyone else when the HST goes up October 1.

Opposition economic development critic Matthew MacKay says the tax fairness measures don't go nearly far enough to be able to mitigate the impact of the HST on low- and middle-income households.

"The New Brunswick government raised the HST last month, and they gave back one-third of the new revenue in mitigation measures to vulnerable groups," MacKay said.

"This government needs to take a page out of the New Brunswick book and look at putting money back in some of these Islanders pockets' instead of taking it."

'There's just nothing left'

MacKay also said there should be no HST on necessities such as home heating and electricity.

"It's coming right out of the backs of Islanders," he said.

"The more money in people's pockets, the more they'll spend. By taxing these people there's just nothing left. People are struggling every day ... There's people call every day that can't afford to put food on their table."

During the spring 2016 sitting of the P.E.I. Legislature, the Official Opposition asked Finance Minister Allen Roach to table whatever impact analysis government had conducted on raising the HST. The minister said he would, but the documents were never tabled.

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