The Parliamentary Budget Office on Monday said the Trudeau Liberals’ two-month GST break will cost 70% more than claimed by Finance Minister Chrystia Freeland, per Blacklock’s Reporter. Analysts said Freeland failed to account for mandatory compensation owed provinces that harmonized their own sales tax collections with the GST.“The Budget Office examined the potential impact of the bill on federal compensation to provincial governments that collect the harmonized sales tax under their respective Comprehensive Integrated Tax Coordination Agreements,” said a Budget Office legislative costing note. “That is Ontario, Newfoundland and Labrador, Prince Edward Island, Nova Scotia and New Brunswick.”Freeland had put the cost of the 60-day tax holiday at $1.6 billion. “If these provinces do not waive the compensation required under these agreements the Budget Office estimates the federal cost would be $1.3 billion greater,” a total $2,720,000,000, it said.Bill C-78 An Act Respecting Temporary Cost Of Living Relief would suspend GST charges on itemized goods from December 14 to February 15. Minister Freeland in December 4 testimony at the Senate National Finance Committee would not discuss compensation for the five provinces with harmonized sales tax collections.“Now is the right time for all of us to proactively take that step to say, yes, let’s do this and let’s help the people,” said Freeland. The finance minister acknowledged no provinces were consulted prior to the introduction of Bill C-78.Sen. Joan Kingston said the tax holiday “wasn’t planned” by provinces. “Are there ways to equalize how the provinces are treated?” asked Kingston.“I would hope all provinces across the country will recognize this is a good thing,” replied Freeland.Sen. Krista Ross put New Brunswick’s loss at $62 million. “Would you agree with that number?” asked Ross. “It’s the right thing for provinces to be contributing their share,” replied Freeland.“The way we should be working on this in partnership with provinces is to say let’s step up together for our people. The federal government has said we are stepping up.”Sen. Jane MacAdam said provinces had a legal right to compensation. “Will the federal government compensate Prince Edward Island and other provinces that have harmonized sales taxes?” asked MacAdam. “This is going to provide real support to Islanders,” replied Freeland.GST-free items under Bill C-78 include beer and wine, books and printed newspapers, video game consoles, diapers, children’s toys, shoes and apparel, Christmas trees “natural or artificial,” prepared meals including restaurant and take-out fare, store-bought pies and cakes, croissants and pastries, snacks including chips, Cracker Jack, granola, ice cream and frozen yoghurt, and sweeteners including syrup and honey.
