The Washington State sales tax exemption for BC residents that was set to begin tonight when the HST kicked in has been halted by an American judge.

The City of Bellingham and Whatcom County mounted a last minute legal challenge of the exemption that sought to capitalize on Canadian consumer angst over the implementation of the HST.

The challenge filed in a Skagit County courtroom was successful late Wednesday afternoon in getting an injunction until July 9th, when a judge will hear arguments by the state and the City of Bellingham for and against the exemption.

So why would Bellingham oppose a move designed to bring more shoppers to the area?

Ken Opplinger, President and CEO of the Bellingham and Whatcom County Chamber of Commerce says state officials didn't consult local governments or business before announcing the exemption.

"We're already providing a substantial price break and that's why people come in the numbers they come. We didn't really see a reason to have this additional price break go in when it meant that local governments here were going to lose millions of dollars in revenue."

For the local Chamber of Commerce, that raised the specter of higher taxes.

"It would most likely have to be made up by taxing businesses here in the area for the loss of revenue."

He says just like in Canada, local governments have had to make deep cuts and can't cut any more.