This week, British Columbians waved goodbye to the Harmonized Sales Tax. Regarded by many economists as sensible and prudent, the HST ultimately led to the resignation of a sitting premier, a change of leadership in the ruling party, a mail-in referendum and, finally, a return to the old tax system.
It is still puzzling why the governing B.C. Liberals chose to bring in the HST in a way that was politically suicidal, especially given the success that their previous landmark fiscal policy enjoyed. While the merits of the carbon tax are still being debated, it is impossible to deny that it was a monumental communications triumph, aided by carefully planned photo-ops, images of the province’s majesty and slogans meant to motivate people to act in order to save the planet. A $100 rebate cheque was mailed to every taxpayer. At the time, the opposition NDP was caught off guard and unable to articulate a policy that dented support for the government. The 2009 election gave another majority mandate to Gordon Campbell’s Liberals.
Somehow, though, the Liberals forgot the lessons of the carbon tax and botched the implementation of the HST – a fact acknowledged by then-finance minister Colin Hansen. Just three months after their electoral victory, the Liberals trailed the New Democrats, ultimately dropping to a historic low of 23 per cent approval when the HST came into force.
In 14 months, a period that included the Vancouver 2010 Winter Olympics, the ruling party was abandoned by half of its voters, and Mr. Campbell’s approval rating fell to single digits. A grassroots campaign to force a referendum on the HST succeeded, and the Premier’s last-ditch effort to persuade the public in a TV address of the value of the tax received mixed reviews. While two-thirds of British Columbians welcomed his proposal to reduce the tax rates on all personal income up to $72,000 by 15 per cent, less than one in 10 found him “convincing” when he discussed the decision to bring in the HST. Just days later, he would step down.
Incoming premier Christy Clark relied on Finance Minister Kevin Falcon to articulate the benefits of the HST. But, in the end, it was not enough. The HST was defeated, with 55 per cent of B.C. voters ticking the Yes box on their mail-in ballots. The opinion of economists and the promise of a kinder, gentler system did not matter. Voters seemed ready to punish the government – and did.
This week, Angus Reid Public Opinion asked British Columbians about the HST. Words like “lied,” “underhanded” and “unfair” were used by respondents who opposed the tax. A majority (53 per cent) thought the timeline to scrap the HST and go back to the GST and PST system was too long. In fact, a third of respondents (34 per cent) said they held off on purchases because of the HST.
More than half of British Columbians (53 per cent) were satisfied with the outcome of the referendum, while 38 per cent expressed dissatisfaction. Abhorrence of the HST drops significantly depending on the household income of respondents, from a high of 62 per cent for those earning less than $50,000 a year to a low of 41 per cent among those earning more than $100,000. While three in five B.C. NDP supporters are happy to see the HST gone, only about a third of Liberal voters share this view.
British Columbians are divided on the tax, however, when they look to the future, with 38 per cent claiming the province will have no choice but to adopt the HST down the road, and 43 per cent disagreeing with this assessment. The PST may well be, as Mr. Falcon described it in the legislature, a “stupid, inefficient tax,” and a sizable proportion of British Columbians expect a new HST to be implemented by a government, of any political stripe, at some point. But whoever has to make that decision would be wise to learn from previous mistakes. Acting behind closed doors and with little consultation will not make British Columbians support a policy, no matter how smart and efficient it may be.
Mario Canseco is vice-president of Angus Reid Public Opinion. He will be providing regular analysis of the firm’s numbers throughout the 2013 B.C. election and writing a weekly column for Globe BC.