After what BC’s finance Minister Kevin Falcon called “a difficult negotiation process”, the federal government has agreed to give BC five years to pay back the $1.6 billion that was given to the province for HST transitional funding. The transitional funding was distributed to BC residents as a way to ease them into accepting the shift from a separate taxation program of PST/GST to a harmonization of both taxes.

Premier Christy Clark and Falcon have been in negotiations with the federal government to try to reduce the total repayment amount to Ottawa or eliminate the debt altogether. According to an official statement made by Falcon this week, the province will still have to pay back the full amount less interest he said would total close to $118 million.

And while Falcon assessed the deal to be fair for both the federal government and for BC, the anti-HST leader Bill Vander Zalm thought the deal was anything but fair.

Vander Zalm said he expected more from provincial negotiators assessing that the time that BC will have had the HST in place should have been taken into consideration given that the federal government will have collected an estimated $1 billion in extra tax dollars. Vander Zalm is unhappy with the outcome of the negotiation calling it a “disaster”.

Some financial analysts were also perplexed as to why the federal government failed to credit BC with the three-year HST term believing that the waiving of interest payments may be in lieu of credit.

Regardless of this new development in the ongoing saga surrounding the HST in BC, the timeline for switching back to the PST/GST system remains unchanged–still sitting at 2013. The provincial budget will suffer a hit for the 2013-2014 budget while the deal will push this year’s deficit to more than $3 billion.

Although nothing was said regarding any tax increases or program cuts, with a deficit of more than $3 billion and $1.6 billion in debt to pay off to the federal government, British Columbian taxpayers are sure to feel a negative impact as a result of the continuing HST controversy.