Frank McKenna says HST will pay off for P.E.I.

Stephen Brun
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Frank McKenna believes Islanders need a little faith when it comes to a harmonized sales tax on P.E.I.

McKenna speaks from experience. The HST has been in place in New Brunswick, the province he once led as premier, for more than a decade.

A 14 per cent tax will take effect on the Island in April 2013, and has drawn criticism from some corners, including from the Opposition Progressive Conservatives.

McKenna said New Brunswickers levied similar arguments against HST when that province decided to implement it in 1996, but most residents now barely think about in anymore.

“Our major reason for doing it was to lower the overall tax rate to make it simpler and administratively more efficient and cheaper, and also to make (New Brunswick) a more attractive jurisdiction for investment, leading to jobs,” McKenna said of the province’s 13 per cent tax.

“(HST), however, is always controversial because the end result is always extraordinarily beneficial, but it takes a little bit of a leap of faith. You have to believe that businesses will end up passing the tax through, resulting in lower prices to consumers.”

McKenna led New Brunswick from 1987 to 1997, so his term as premier was just ending when HST came into effect there.

He recognized that the public dislikes the tax rate increasing on several services and commodities, but countered that the rate went down for most items that were subject to the tax already.

McKenna cited studies that found New Brunswick businesses did in fact pass their tax savings on to consumers. He added that similar studies found business investment went up 12 per cent per year following the HST implementation, while unemployment was cut in half thanks to the new system.

“Prince Edward Island is in a very, very good spot because we now have over 10 years of experience in New Brunswick, Nova Scotia and Newfoundland,” he said. “Consumers did not, in fact, lose — they were winners — and businesses ended up significantly increasing their investments.”

McKenna added that he has no vested interest in “shilling” HST to provinces like P.E.I., but said taxpayers here would see the positive results.

The most striking demonstration of that in Atlantic Canada, he said, is that no government or political party in the three provinces with HST has ever campaigned on a promise to reverse the tax.

“That is highly unusual,” he said. “That informs you that all parties have recognized the merit of the harmonized tax.”

Organizations: Opposition Progressive Conservatives

Geographic location: New Brunswick, Prince Edward Island, Nova Scotia Newfoundland Atlantic Canada

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Recent comments

  • It's time to be grateful . . .
    December 20, 2012 - 09:23

    If Mr. McKenna, the current Deputy Chairman of the Toronto-Dominion Bank and a mulit-millionaire, says the HST is good for us Islanders we'd certainly be ridiculously stupid not to believe him. What's wrong with us anyway? It's way past time for us to be grateful for the HST, PNP, Plan B, Bootleg Tourism Contracts, Patronage Appointments, Unaccountable Corporate Investments and all the other gifts of democracy we're receiving? Clearly, it's time for Islanders to just grow up, bow to Mr. Ghiz, paste on our smiles and drink up the Purple Kool-Aid . . .

  • Joe Blow
    December 19, 2012 - 20:25

    I see Ghiz and his government full of morons asked McKenna to write an article of support for his fellow Liberals. How come Ghiz doesn't ask anybody from BC their 2 cents on the HST???? This whole article is full of the same crap lies that Ghiz and Sheridan have been spewing. I want the opinions of people from BC regarding the HST.....seems to me they have more to say on the matter. McKenna was just towing the party line in this puff piece!! Now with 10% more bull!!!

  • Curious
    December 19, 2012 - 18:42

    I'm curious who asked Mr McKenna to voice his opinion. Him being former Liberal premier and all...

  • disagree
    December 19, 2012 - 17:17

    Does Uncle Frank think people of British Columbia, including former premier Mr. Vandersam, for fighting and getting HST repealed in the next spring?

  • johnthames
    December 19, 2012 - 17:14

    From the Ivory tower to you, as Frank cuts himself another slice of chicken and has that extra piece of pie. Beat it Frank, ya hear!

  • reality check
    December 19, 2012 - 17:10

    I don't like McKenna (the little man syndrome from da Miramichi), nor do I like Ghiz Sr nor Ghiz Jr, nor did I much care for Pat Binns. I pay taxes and expect some level of public services that are similar to other provinces while still being affordable. When I buy items, I sometimes do so in Moncton because I pay 2.5% less tax (13% HST vs our 15.5% GST/PST). I cautiously accept that HST is a necessary evil in PEI but am not happy about the electricity going up. Overall though, this tax won't resolve our deficit in PEI. We need to SLASH this provincial government. Almost 40% of civil servants are non-merit political appointments. And we have too many paved & plowed roads, too many schools, too many hospitals and too many of those Access PEI offices. Privatize the liquor stores and chop chop chop the bloat in the public sector.

    December 19, 2012 - 16:07

    Yes NB is one of the few places in Canada to have a worse trend in unemployment than PEI in recent years. Wages though higher than PEI still suck in New Brunswick. The government suffered a credit downgrade. The economy nor public finances shaped up with HST in NB. And to make matters worse their situation is at least one that involves a real economy with some private sector economic growth. Not so on PEI. Here only government primes the pump and the well is dry. McKenna may as well be talking through the back of his suit pants. His comments are irrelevant.

  • Independant
    December 19, 2012 - 15:59

    Well isnt that nice, a well to do Fiberal saying you Islanders are stupid and you will forget about The HST in the next election and business as usual For us rich smart Liberals. Article should read, Liberal says shut up and pay more taxes we know what is best for you peasants.

  • Captain Canuck
    December 19, 2012 - 15:16

    Frank McKenna was a great politician. Now he's a great schill. That's just schilly talk, frankly.

  • Sandy MacKay
    December 19, 2012 - 15:10

    Not sure what studies he quotes but according to stats Canada the unemployment rate decreased slightly in the following year and still hovers around 10% - also studies from UNB don't share the same great things he would suggest. When making statments he should actually point to the study. PEI has 240 fewer people getting EI in the past year while NB increased by 270. The Unemployment rate was above 10% from 1997 onward - also A $20,000 earner will pay $466 in income tax while a $70,000 earner will pay $6,185 in income tax. In fact, it takes thirteen $20,000 earners to pay the same tax as a $70,000 earner.So that is why an hst instead of income tax increase

  • terry macdonald
    December 19, 2012 - 14:38

    from: simply put Hey Frank your unsolicited remark stinks of meddling..Mind your own Beeswax!!!

  • don
    December 19, 2012 - 14:27

    remember ghizzy and wes said they would balance the budget by 2013 that was his word during the election. and he can't blame the PC'S for him not knowing how far he put us in the hole.

  • Laurie
    December 19, 2012 - 14:17

    "Good for the province" ... That's what they said when they brought the HST into Ontario. Privately owned companies had to find a way to pay for this extra tax and guess what - massive layoffs! It's still very difficult to find work in Ontario, even if you could afford to buy a house!! It's only good for the government - NOT the people they represent. Next thing you know they (the government) will decide to give you your tax refund in small monthly installments. Because we are not smart enough to know how to manage our money! (SARCASM!!!!)

  • Greeneyed Monster
    December 19, 2012 - 13:36

    As a small business owner, I welcome the tax. In all honesty, I will not be lowering the cost of goods to patrons, nor will I be in any rush to increase wages. I will be doubling my contributions to retirement and perhaps a few more dollars toward political contributions. This is how the GST best benefits me and why shouldn't I utilize it to my best interest.

  • Really
    December 19, 2012 - 13:12

    I guess everyone forgets the gst was supposed to begone years ago, so why is it being added on. Lets get rid of the gst and just keep our pst and call it hst.

  • SAP
    December 19, 2012 - 12:44

    Well, heck, if Franky says it's good, what do w have to worry about...............

  • Get Real
    December 19, 2012 - 12:43

    Frank McKenna is a LIBERAL, Right!!!! What would expect him to say.

  • Peiguy
    December 19, 2012 - 12:34

    I cannot see how it can help small business, There have been no specifics given. I don't see how it helps the consumer, paying more out for practically everything that I buy rent or use is not any thing better. I am being forced to reduce my standard of living.. why? I have worked hard to get above the poverty line. take my money I spend less ...bad for economy! I don't see how it helps anyone but the Industries that will be granted tax credits as a result of HST implementation. The Govt has not given any concrete examples of how it will be of benefit. The same tax credits would not a) be needed without HST or B) are already existing but would be a bit higher.

  • thanks
    December 19, 2012 - 12:29

    Thanks Frank.Would you be a big Liberal?We have seen all the dollars spent and wasted to wes saysTO EDUCATE US by full page advertisements that did not work.Now they are going out to get their Liberal friends in high places to Educate us poor Islanders.

  • Lloyd MacLeod
    December 19, 2012 - 12:23

    As if Frank Makenna gives a rats a$$ what happens to PEI. He must be good friends with wes and bob. The Three Stooges think alike.

    • The Edge
      December 19, 2012 - 20:01

      I think Frank is too busy sitting in boardrooms on Bay street for one of the big banks to realize the whole story of what is going on here in PEI...that we got lied to in the last election by the Liberals on a platform that include they WEREN't going to introduce the HST. Then, as soon as they get in, do a 180 and force it down our throats. Go back to NB or Bay Street Frank. We don't need your lame 'perils of taxation wisdom'. Idiot.

  • SG
    December 19, 2012 - 12:15

    PEI can not be compared to any other Province in Canada. What is N.B's Population compared to PEI? How many Job Opportunities does N.B. have compared to PEI? How many of their Tax Paying Citizens are moving to the West to find work? What is there Minimum Wage in N.B.? Is it $10. hr.? Are their Electricity Rates increasing by 11.2% followed by three additional increases of 2.2% over the next three years? Is their Gas Prices also increasing? What is N.B.'s Cost of Living Index in comparison to PEI? We heat our home via Electricity. HST in addition to the Rate Increases on our Electricity will be a Huge Expense for our household. Comparing the HST affects in N.B. and N.S. to PEI would be equivalent to comparing Apples to Bannanas. I'm sure Islanders are very aware and understand completely what affect the HST will have on Islanders. I seriously doubt businesses on PEI will pass the tax through, resulting in lower prices to consumers.”HST is Great for Business but will create significant economic hardships for all Islanders especiially our Low and Middle Class Islanders and our Unemployed.

  • ED
    December 19, 2012 - 11:56

    Frank McKenna also said similar things about call centers. The only truth in what he said is that it makes collection easier.That by itself doesn't make it a good and just tax. It just makes everything much more expensive for the end user, you the consumer.Please, don't let some clown come on here and say it's revenue neutral!

  • Nora
    December 19, 2012 - 11:52

    Great more politician telling me how great it is to have more taxes taken from me.....well I guess if a politician tells us then it must be true. Nice to know that that our employees (government representatives) have our best interest at heart...oh wait its their best interest they are looking out for.

  • alfredd
    December 19, 2012 - 11:40

    well, the last argument that no one in the 3 other provinces have tried to reverse the HST is laughable, --- it is a pile of money to piss away, why would any politician ever reverse that, ----all the rest of his arguments fade on the background that at least N.B. and N.S. are no better off, visibly than they were before the tax, --- the unemployment rates are still high---I agree McKenna should not have any reason to shill for HST here, but for some reason that did not keep him from putting his nose in it. ---McKenna should know that Ghiz ran a campaign a few months before saying he would NOT bring in the tax, ---he spend like an idiot and now are setting out to fleece us, -- further more the tax is NOT 'revenue neutral'-- The issue on PEI is breach of trust, over spending on things people did not want, and now Ghiz's resolve to tax us to death.

  • bob from cardigan
    December 19, 2012 - 11:05

    Frank knows that the tax is bad for the provinces. He is making correlations that just don't have any evidence behind them. It's basically a money grab for the provinces and another way to tax the citizen to death (literally). You can keep your tax, that's why all the people travel to PE to shop from NB and NS, no extra tax on clothing and goods.

    • huh
      December 19, 2012 - 12:00

      But PEI currently doesn't charge sales tax on clothing either. And both NS and NB have had the HST tax for years. So your last sentence can't be right.

  • intobed
    December 19, 2012 - 10:51

    The only benefit this horrible punishing tax will have is the provincial government will have million of dollars more (plucked from the pockets of taxpayers) to pass out in patronage plums to party supporters. These same businesses will also see reductions in tax paid, so a double bonus for them. Meanwhile, low and moderate income earners will suffer.

  • mr.nobody
    December 19, 2012 - 10:16

    Thankfully there is a rich liberal on hand to explain to us poor idiots that HST is actually good for us. Basically he is saying that because it hasn't been repealed it is beneficial. Idiot.

    • spud
      December 19, 2012 - 11:51

      It is true that in Ont. businesses benefited when the HST was brought in to this Province BUT there was and is no evidence that they passed the savings on to the consumers.

  • Jacinta
    December 19, 2012 - 09:59

    Maybe Frank McKenna can pay my light bill, because the HST is just a noose around my neck!

  • Tax Accountant
    December 19, 2012 - 09:49

    HST is a tax increase. Every consumer on PEI will have to pay more in taxes. Simple as that.