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(David Parkins for The Globe and Mail)
(David Parkins for The Globe and Mail)

Politics

HST proving a bitter meal to swallow Add to ...

For most of the three dozen industry leaders assembled in Premier Gordon Campbell's cabinet room one morning last month, the news that he had hastily decided to adopt the harmonized sales tax was cause to rejoice.

After all, it's not every day the province hands business almost $2-billion in tax breaks. But amid the high-fiving crowd, some were mouthing the word "betrayal."

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The dissenters were the more sensitive types - as in sensitive to consumer whims - restaurateurs and new-home builders, in particular, who see empty seats and unsold lots in the shift to the HST. They had dutifully contributed to the B.C. Liberals' coffers to help Mr. Campbell win re-election in May - but that was back when they'd been promised the Liberals wouldn't adopt the HST.

Now these erstwhile Liberal backers are helping to fuel a public backlash against the HST, a tactic that is giving a measurable boost to the fortunes of the B.C. New Democratic Party.

When Mr. Campbell brought together those industry leaders - representing the spectrum from big mining to small retail - he was quick to acknowledge that some sectors of the economy might suffer. He made it clear he wasn't going to budge on the tax, which will blend the province's sales tax with the federal GST starting next July, but he was open to looking at other ways government could help those industries.

Implicit in his offer was the idea that they could work it out - quietly - without adding to the public opposition that has helped propel the NDP ahead in the polls this week.

The room quickly divided into camps. Representatives of the home builders and hospitality industry were first on their feet to protest.

But forest-industry executives who have struggled for survival these past three years could muster little sympathy over the concerns of burger merchants.

With that divisive tone inside the room, it's little wonder that the confrontation spilled outside into the public realm.

Casey Edge, an executive with the Canadian Home Builders Association in Victoria, is hearing the anger from his members who just can't see their customers absorbing yet another layer of tax. The provincial sales tax doesn't apply to new homes, so the HST will effectively jack up the cost on the biggest purchase most people will ever make.

"We supported the Liberals because of their policies," he said in an interview this week. If Mr. Campbell's party no longer stands for the tax-cutting, anti-regulation party, well, all bets are off.

As a staunch B.C. Liberal supporter, home builder Wayne Davis is conflicted about criticizing Mr. Campbell's government. "As a fiscal conservative, I agree with the philosophy of this," he said. But he scoffs at Finance Minister Colin Hansen's claim this week that all B.C. businesses will benefit.

Mr. Davis's company, Award Builders, is busy right now transforming the side of a mountain near Victoria into a development of high-end homes.

This week he was overseeing construction on a home he has presold to a young couple. At the job site, there is little more to see than a concrete foundation. Two workers were laying drains. But the couple's $679,000 investment is taking shape as a 3,200-square-foot home with glimpses of the Olympic Mountains across the Strait of Juan de Fuca.

The home will be completed before the HST comes into force, which is fortunate. The new tax would add thousands to the price tag - enough to chase away that couple, especially in the current market.

"In the last election we were putting up the Liberals' signs," Mr. Davis said. "Whether we do that in four years - we'll see."

Across the hillside development, the sounds of cement mixers and pneumatic nail guns can be heard. A year ago houses here were selling for close to $1-million, but builders are adjusting to the market by designing more-modest products.

Gordon English has developed a number of the lots here. He notes that his company, Genco Construction, is not going to come out ahead with the HST if people aren't buying new homes. The solution, he said, is for the province to amend its formula, which would provide a rebate on the tax for the first $400,000 on a new home. The threshold is too low for many Metro Vancouver and Greater Victoria homes.

Mr. English was active in the last provincial election campaign, organizing for a B.C. Liberal candidate. He's not about to cut up his membership card, but he's not impressed with the party right now.

"What we are objecting to is what we see as a bit of a tax grab," he said. "We're not PhDs, but we can do basic math. To suggest it is not going to add to the cost of a new home is simply an insult."

Follow on Twitter: @justine_hunter

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