British Columbia to repay C$1.6 billion to federal government

Wed Jan 11, 2012 2:54pm EST
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OTTAWA (Reuters) - British Columbia has agreed to repay the federal government over five years the C$1.6 billion ($1.57 billion) it received for harmonizing its provincial sales tax with a federal sales tax, the province announced on Wednesday.

A referendum last year had forced the western Canadian province to get rid of the harmonized tax, which was extended to items such as restaurant bills.

British Columbia Finance Minister Kevin Falcon said in a statement that the province had reached an agreement with the federal government for a five-year payment plan with no interest. The whole amount will be applied to the provincial books for the 2011-12 fiscal year.

(Reporting by Randall Palmer; Editing by Jeffrey Hodgson)