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Small, but not insignificant

Two is a very small number. For children, it’s one of the first numbers they’ll learn. Most people have two hands, two feet, two eyes, two parents — the list goes on. It’s relatable and pretty easy to comprehend.

But there’s nothing easy when it comes to the impact a two-percentage-point HST increase will have on working families and those living below the poverty line.

Spreading that percentage increase over the various expenses people deal with in order to live, families are going to need to make some tough decisions about how to spend their money.

For families with an income below $30,000, the province hopes to reduce the burden somewhat by introducing an enhanced HST rebate. The argument made last week is that rebate will offset any increase. However, that might not be entirely accurate.

As Dan Meades, provincial co-ordinator of Transition House Association of Newfoundland and Labrador, noted when speaking with The Telegram that those eligible for the rebate will start pay two per cent more on everything starting next January, but the rebate won’t come until October 2016.

How will families cope over those first nine months? They’ll likely rack up debt by using credit cards, resulting in increased interest payments. Chances are those living in poverty will still have a price to pay.

For middle-income families, life will become a little bit harder too. They’ll be losing out on the axed energy rebate, so the cost of heating the home will increase noticeably next year. Much like the fiscal situation facing the province’s coffers, budgeting will be tight.

For businesses, the prospect of watching customers strive to tighten spending and look for the cheapest options available will not be ideal. Many consumers will further flock to major department stores or Costco for cheap goods, with small businesses likely losing out.

For consumers looking to purchase big-ticket items like cars or homes, many will be inclined to hold off — or make a mad dash to look after that purchase before the increase takes effect next January. Keep in mind too that the Liberal opposition has already stated it will reverse the HST increase when it comes into power. If you’re a betting person who thinks the Liberals are destined to form the next government this fall, you might also wait awhile.

There’s nothing easy about this decision the governing Progressive Conservatives have made. With further deficits on the horizon, perhaps there was no other choice. But that doesn’t negate the fact it will be a hard pill to swallow for many. This new budget makes it plain that we are not living in prosperous times.

The so-called promising future feels like it’s a ways away.


Andrew Robinson is The Compass’ editor. He can be reached by email at

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