The B.C. Liberal government said today it will reduce the harmonized sales tax by two per cent if the new tax remains in place following a referendum vote next month.
The mail-in ballot will decide whether the HST stays in place or the province returns to its previous tax system, which included the provincial sales tax (PST) of seven per cent and the goods and service tax (GST) of 5 per cent.
The first one-per cent cut -- bringing the HST down to 11 per cent -- would come on July 1, 2012. The second one-per recent reduction would take place on July 1, 2014.
To offset the impact of the HST reduction, and in an effort to keep to its promise to balance the budget in 2013-14, the Liberals said they will raise the general corporate income tax rate to 12 per cent on Jan. 1, 2012 from 10 per cent. The government also said it will not institute a reduction to zero next April of the 2.5 per cent small business tax rate.
The business tax measures are meant to be temporary until the province's economy allows for further reductions.
