I'm going to say it right upfront, so you know exactly where I stand: the HST is good public policy and a good tax.
Most tax lawyers and economists agree with me. Here's why:
First of all, you get rid of an entire provincial government department charged with collecting a tax and passing the expense on to the federal government. Good riddance.
Second, it's good for business. Business will get input tax credits on the full 12 per cent in BC, and 13 per cent in Ontario, and it won't have to deal with the archaic and byzantine rules that applied to the old PST regimes. With some exceptions, the GST rules and the HST rules will be the same. And the streamlining will be more efficient for business.
The proof is in the pudding in B.C. My law office and other law firms in Vancouver are already acting for U.S. businesses that could have otherwise located in no-sales-tax Alberta, but they are coming to B.C. It's not just because of the lifestyle, the ocean and the mountains, it's because of the input tax credits and no longer having to swallow the 7 per cent PST. (Note to anti-HST leaders in B.C.: these are businesses that are hiring British Columbians).
Third, accountants, consultants and other professionals will now have to charge the tax lawyers have had to charge in B.C. for almost 20 years, levelling the playing field in this province.
Fourth, the PST, whether in B.C. or elsewhere, is discriminatory. Why didn't the PST apply to services all these years? Why just "goods?" If you paid 7 per cent or 8 per cent PST on the televisions, cars and barbeques you bought before July 1, why do you have a problem paying the same level of tax to your barber or your realtor? Are barbers and realtors somehow more important than the sellers of barbeques and lawnmowers that they shouldn't have the same level of tax applied to them?
If I was a supplier of goods that the PST applied to all these years, I'd wonder why the service sector was getting a free ride for so long.
Fifth, how does a province like B.C. compete with Ontario if Ontario is adopting the HST? Ontario businesses will have a competitive edge that we in B.C. would lose if we didn't come aboard as well, particularly in sectors such as high tech and film and TV. Seven per cent is a big hit to swallow for great scenery and skiing.
Sixth, it's hard to turn down almost $2 billion from the federal government to make the transition.
And finally, they aren't touching my income. Just my spending. So I can save or invest more.
As for former B.C. Premier Bill Vander Zalm and other anti-HST proponents who say the tax is a windfall to business (Mr. Vander Zalm was once a "free enterprise/pro business" premier), I'd remind them not to forget that virtually all taxes collected by government emanate from the private sector. By paying corporate taxes and by paying employees who pay their taxes, "business" pays for the things government provides, such as education and health care.
Besides, the experience of the other HST provinces suggests prices will eventually come down. If consumers think their realtors and barbers will benefit too much by charging the HST (thereby getting a larger input tax credit back), then they'll strike a better deal with their barbers and realtors, won't they? They'll shop around. And prices will come down.
Everyone should appreciate that Mr. Vander Zalm never lowered the PST when he was premier of British Columbia, even though he had the chance to do it. He also introduced the hated Property Transfer Tax that applies to the sale of all real estate in B.C. So playing the "Sarah Palin Tea Party populist" is rather disingenuous.
Despite the arguments of business leaders, tax lawyers and economists who believe the tax will benefit B.C. by attracting business that would otherwise go to Alberta or Ontario, the anti-HST proponents appear to have misrepresented the tax in the media, and on websites dedicated to overturning it. Vancouver tax lawyer David Robertson has formally complained to the Chief Electoral Officer that the anti-HST proponents falsified 21 out of 70 "facts" about the tax on one of their websites in order to gain signatures for their anti-HST petition in B.C.
When he tried to correct some of the incorrect information posted on a Facebook group dedicated to overturning the tax, he was dumped from the group for "offensiveness" and all of his previous posts were deleted. Unfortunately, the tax hasn't been sold very well by the provincial Liberals, allowing the anti-HST proponents to gain the upper hand in the debate, one that seems non-existent in Ontario.
What's interesting about debates on taxes is that many of the people who complain about them are the same ones who want 24-hour turnaround time for MRI's and hip replacements, well-paid teachers and nurses, hospitals without waiting lists, more legal aid, homes for the homeless, no school closures, their roads paved, and cheaper wine.
I hate to break it to the naysayers, but taxes are the price we pay for civilization, something people in California (which can't raise taxes constitutionally) are discovering amid the state's crumbling infrastructure, collapsing public school system and regular fiscal crises. As for Greece, from where I've just returned, a Greek diplomat in the adjacent airplane seat told me hardly anyone paid income tax there yet everyone expected to comfortably retire by 55, which infuriated expat Greeks in Canada and, of course, the Germans who bailed Greece out of its endemic financial profligacy.
Unfortunately, taxes are like a prostate exam or that colonoscopy you're dreading: an awful experience but one that could very well save your life. The question is how to do it without killing the goose that lays the golden egg – the goose being the private sector that actually creates the tax base that pays for the roads, schools ... and colonoscopies.
If guess if taxes are like a colonoscopy, make it as painless as possible, but make it worth my while. So if I have to be taxed to pay for my teachers, nurses, or my health care, tax me on something I can control, like my spending, rather than what I earn, which is a disincentive to me wanting to work harder to earn more money. Why work harder to make more money if the government will just tax it all away? But spending? That's a different kettle of fish. So that's why I like the HST.
There's an old book that should be making the rounds more these days, at least here in B.C. Its called Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay, which is ostensibly about England's South Sea Bubble but it's just as much about how people are inclined to believe the "wondrously false" more than the "wondrously true."
"Men" he said "think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, one by one."
The HST debate, at least in B.C., is clearly an example of the madness of crowds, fuelled by charlatans trying to hoodwink the public. I'd say we live in a time and a place when, in Yeats' famous words, "the best lack all conviction while the worst are full of passionate intensity."
Special to the Globe and Mail
Vancouver franchise lawyer Tony Wilson is the author of Buying A Franchise In Canada – Understanding and Negotiating Your Franchise Agreement and he is ranked as a leading Canadian franchise lawyer by LEXPERT. He is head of the Franchise Law Group at Boughton Law Corp. in Vancouver and acts for both franchisors and franchisees across Canada, many of whom are in the food services and hospitality industry. He is a registered Trademark Agent, an Adjunct Professor at Simon Fraser University and he also writes for Bartalk and Canadian Lawyer magazines.
Tony Wilson