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Illustration by David Parkins for The Globe and Mail
Illustration by David Parkins for The Globe and Mail

Is NDP's 'election on the HST' bad news for the Tories? Add to ...

Stephen Harper, who once famously declared there was no such thing as a good tax, must now be wondering if a revolt over consumption tax hikes in B.C. and Ontario could eat into Conservative political fortunes.

It certainly appears to have helped one rival beat him this week.

NDP Leader Jack Layton's resounding by-election win in a Vancouver-area riding Monday - the New Democrats thumped the Tories by 14 points - occurred in part because the opposition turned the race into a referendum on the looming harmonized sales tax in B.C.

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It was a disappointing result for the Tories, who'd even announced a judicial inquiry into disappearing salmon stocks days before the New Westminster-Coquitlam by-election in hopes of boosting their appeal.

Mr. Layton says results in New Westminster-Coquitlam show his party can make Mr. Harper pay a political price for the Conservatives' role in the HST, a massively unpopular tax shift taking place in both B.C. and Ontario next July.

Pollster Darrell Bricker of Ipsos-Reid cautions against reading too much into one by-election. He says HST anger may serve as a catchall for unfocused voter discontent, but it's hard to predict its staying power for future races.

Mr. Layton begs to differ.

"[This]was the first election on the HST," says the NDP Leader, whose party's portion of the riding vote went up eight points from 2008 results. "If it's even worth five points [of vote share] that's worth seats in B.C. and Ontario."

The Harper government is spending $5.9-billion bankrolling the shift to the HST in B.C. and Ontario. It's estimated the new levy will increase sales taxes on about one in five consumer purchases in these provinces.

Economists say this compensation was crucial in persuading B.C and Ontario to adopt the HST, which merges the GST and provincial sales tax into one levy covering the same set of goods and services.

The Conservatives, however, reject the notion their New Westminster-Coquitlam showing is an indication that voters are blaming them for the HST. Heritage Minister James Moore, a Vancouver-area MP, said the Tories were out-organized in the race by New Democrats in an area that has traditionally leaned NDP. The Tory vote dropped three percentage points from 2008.

Pollster Nik Nanos says the B.C. by-election results should give Tories pause. "It may be a precursor of the rough ride Conservatives could expect on the harmonization front."

For months, the Tories have publicly ducked any responsibility for the HST, even though they counselled Ontario and B.C. to embrace the tax. Federal ministers have framed the shift as entirely the result of provincial decisions and left it to premiers Dalton McGuinty and Gordon Campbell to weather the storm. The backlash has hurt Mr. Campbell's Liberal government, in part because it reversed positions on the HST just after a general election.

Yesterday, however, in a sign that populist anger is also troubling the McGuinty Liberal government, Ontario unveiled more exemptions from the HST for consumers.

The HST's economic appeal is that it yields a tax break for business and improves the investing climate for provinces that adopt it. What's politically perilous, though, is that it shifts some sales-tax burden to consumers from business, and, in the short term at least, hikes costs for consumers.

Mr. Nanos said the minority Harper government should be wary of heading to the polls for a general election in 2010 that's anywhere near the July 1, 2010, introduction date for the HST in Ontario and B.C.

Liberal Leader Michael Ignatieff has largely held off attacking the Tories over the HST, leaving the field to the NDP rather than mounting a campaign against the shift that would hurt his brethren in the McGuinty government.

This leaves the NDP free to run against the HST in seat-rich Ontario and B.C. ridings, where they are serious contenders for seats with the Tories.

"Harper should be quite worried because of the timing," Mr. Nanos says. "As soon as the first cash register rings on this, judging by what happened with the GST in the past, this is going to be a political issue."

Ipsos-Reid's Mr. Bricker, however, says it's not clear HST anger can be broadly directed against the Tories. "Can it turn into a populist referendum for the NDP on a national basis? It's got a long way to go from a by-election to there."

 

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