By DAVID COCHRANE AND MICHAEL CONNORS

(CUP) — A new har- monized sales tax could end up costing Atlantic Canadian uni- versities millions of dollars in extra taxes.

Starting next month the new HST will combine the GST and provincial sales taxes in Newfoundland, Nova Scotia and New Brunswick into a single 15-per-cent tax. Prices for many items will fall, but the new tax is much broader and will increase the cost of uni- versities’ heat and light bills, and capital expenditures.

“We have to talk to the provincial government about a significant increase in the uni- versity’s costs,” said Art May, president of Memorial Univer-

March 11, 1997

@°: The Panther Prints

HST could cost Atlantic schools millions

sity of Newfoundland. He says the new tax could cost Memo- rial $800,000 a year.

“That’s the same as cutting the budget.”

A recent study on the effects of the HST on univer- sities done by KPMG, a Nova Scotia based consulting firm, concluded increases in elec- tricity and heat will be coun- tered by other tax exemptions.

“The decision to remove the tax from books and peri- odicals balances it out,” said Ian Fraser, who was part of the KPMG study. “But there will be a significant negative effect on the capital side.”

The capital tax increase means it will cost schools more money to build new buildings or renovate old ones and this is bad news for several universi-

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ties.

Next year Memorial University plans to begin con- struction of a new university centre and an athletics build- ing at a total cost of $25-mil- lion. Dalhousie University will start a new $12-million arts building, while St. Mary’s Uni- versity will buildan $18-million business school.

The new tax scheme means these projects combined willcost $8.25-million in taxes.

“The net effect on us will be negative and it will cost us more money,” said Guy Noel, a St. Mary’s vice-presi- dent.

Noel said St. Mary’s will have to shift its budget around to cope with the new tax struc- ture, but said the HST will still put the economic crunch on

the institution.

“Anytime that there is a change in tax structure that affects our operating expendi- tures and our budgets, capital or otherwise, it further com- pounds the problems we face,” he said.

Meanwhile, May said Memorial hopes to convince the Newfoundland government to rebate the money lost to taxes.

But provincial Finance Minister Paul Dicks said it is unlikely the university will be given a rebate for the HST because of offsetting savings for other equipment it pur- chases.

“For instance, many of the things that it buys — ta- bles, chairs, desks, computers — all of these things are com-

ing down from [a] 20 per cent [tax rate]to 15 per cent,” Dicks said. “So merely because one item goes up doesn’t mean on balance the university should have a rebate.”

Dicks said the reason federal rebates for the GST existed was because originally there had been no tax at all.

“The difference is pro- vincially the retail sales tax already existed across a broad range of items, and that’s be- ing reduced,” he said.

May said if the univer- sity does have to pay the tax it won't be able to fill some va- cant positions or offer certain courses. But the administra- tions has ruled out the possibil- . ity of further tuition fee in- creases other than those al- ready announced.

RK