After BC residents rejected the HST in the provincial referendum held in August, the provincial government warned that residents would be on the hook for the $1.6 billion advanced to the province by the federal government. According to the contract between Ottawa and BC if the province would have implemented and maintained the HST system for a minimum of two years, the $1.6 billion given to pay out HST rebates and implement the system would not need to be repaid. However, with BC residents opting to reject the system earlier than the provincial government anticipated, the province is now looking for ways to recoup the $1.6 billion.

After a recent deficit projection was made by the provincial government reporting BC’s deficit to rise to a whopping $3.1 billion for 2011-2012, Premier Christy Clark put in a formal request to the federal government for a reduction of the amount owed. Premier Clark is hoping that the government will take the province’s “tight fiscal circumstances” into consideration and ascertain the necessity of balancing the books before making any formal decisions in the matter. According to federal sources however, the Stephen Harper government is not looking to reduce the amount owed by the province of BC.

Premier Clark is seeking credit for the time that the HST was in place (nearly 2 1/2 years once the HST is abolished in 2013) as well as an extended repayment period in order to pay back the remaining balance.

Put in effect on July 1, 2010, the HST, a combination of the provincial sales tax (PST) and government sales tax (GST) was to remain in effect for five years following the receipt of the $1.6 billion given as transitional aid to the province to assist with the changeover.

Federal sources have yet to comment on the extension of the repayment period.