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B.C. Voters Opt To Scrap HST

British Columbians have voted to scrap the Harmonized Sales Tax, Elections BC announced Friday, meaning the province will now begin a transition back to the former PST.

54.73 per cent of people voted to scrap the HST in the referendum, Elections BC said as it released official results, with 45.27 per cent voting to keep it in place.

The result is a victory for former premier Bill Vander Zalm, who has led a campaign against the tax for close to two years, and who forced the recent referendum by collecting more than 500,000 signatures on a petition.

"This is a historic day not only in our province but in our country," he said today. "It's the first time in the history of the British commonwealth that the people actually had a say in how they are taxed."

Premier Christy Clark confirmed the province will return to the PST with all the permanent exemptions that existed before it was replaced.

"While I am disappointed with the results, the public has spoken and now is the time to turn the page," said Clark.

Clark added that her government will introduce measures in the days to come aimed at keeping British Columbia businesses competitive and to help create jobs.

Finance Minister Kevin Falcon said today he was "disappointed" by the result, but "not surprised."

He said the government will seek to return to a Provincial Sales Tax within 18 months, meaning the old tax will be restored by March 31, 2013.

B.C. officials have said the move back to the PST will cost the province about $3 billion, an amount that includes the $1.6 billion transition payment B.C. now needs to return to Ottawa, which administered the HST.

Falcon characterized the result as a "manageable bump in the road", adding the province will be able to meet or exceed its budget targets into the future.

But he said the transition back to the PST will mean government will need to scrutinize all its spending, especially when contemplating any new programs.

"As government manages to get to a balanced budget, in means we will be saying no a lot more than we are saying yes," he said. "Everything will be on the table."

In a statement, NDP leader Adrian Dix called the result "a victory for democracy".

"The people won over the arrogance of the Liberal government and its powerful friends," said Dix, who has long opposed the tax, and who has campaigned heavily against it since April when he became party leader.

"A return to the PST will be good for communities, good for families and good for small business. It will make life a little bit more affordable for working families. It will also ensure that British Columbia has control over its sales tax policy, now and in the future."

The federal government said Friday it respects B.C.'s decision to scrap the HST and vowed to work with the province on transition back two separate federal and provincial sales taxes.

A formal statement also indicated that it will not heed the federal New Democratic Party's call on Ottawa to let B.C. keep the $1.6 billion it got from the federal government to help establish the HST.

"We respect the decision made by the people of British Columbia. We will work with the government of B.C. on the transition," said Chisholm Pothier, spokesman for Finance Minister Jim Flaherty, in a statement.

"The provincial government has already repeatedly acknowledged that the $1.6 billion in transitional assistance will be recovered as per the agreement."

The NDP, meanwhile, congratulated British Columbians for their "historic" overturning of the tax.

B.C. caucus chair Don Davies said it would be "spiteful and damaging for Harper to now force BC to pay back $1.6 billion, after it was already invested in things like health care and education."

Meanwhile, the Smart Tax Alliance, which fought in favour of the tax, called the result regrettable.

"It's a disappointing outcome," Peter Leitch, Co-chair of the Alliance and Chair of the Motion Picture Production Industry Association of British Columbia, said in a news release.

"We respect the referendum decision and the need to restore the old PST/GST system, but a dialogue needs to take place that puts jobs first under a competitive tax system."

At the same time, members of the Alliance called on the government to make moves to help ensure the economic future of the province.

"We are on the precipice of a possible global recession, " said Alliance co-chair Mike Jagger, and President of Provident Security.

"We need to be prepared with policy decisions that put B.C. jobs and businesses on solid footing to compete."

The HST was first announced on July 23, 2009 by then-premier Gordon Campbell - who resigned amid a furor over the tax - and then-finance-minister Colin Hansen.

The announcement to adopt the tax came immediately on the heels of the 2009 provincial election, leading to widespread criticism that it was sprung on the electorate without proper notice.

The tax has also been criticized because more items were taxed under the HST than had been under the previous PST.

An independent report done earlier this year found the HST would cost the average family about $350 extra per year.

Recognizing that burden, Premier Christy Clark announced in May that she would have cut the HST by two points if British Columbians had voted to keep the tax.

The cut would have been in two stages: from 12 per cent to 11 per cent on July 1, 2012; and then to 10 per cent on July 1, 2014.

Clark had also planned to send cheques to all families with children under 18, and all lower income seniors if the tax had survived the referendum.

The turnout for the HST referendum was as high as in the last B.C. general election, according to an analysis by The Vancouver Sun.

Elections BC did not release official voter turnout figures Friday, but a comparison of total votes cast to the number of registered voters in 2009 suggests turnout in the HST referendum was around 54 per cent.

Voter turnout in the last general election was 55 per cent.