It was left to people like UBC law student Chris Thompson to persuade British Columbians, through a YouTube video, of the merits of the HST and the fallacies of Mr. Vander Zalm’s arithmetic. It appeared there was no-one in government that had the guts to stand up to Mr. Vander Zalm and the other anti-HST proponents, leaving it to Mr. Thompson, tax lawyer David Robertson, UBC economist Kevin Milligan, the Stickman and, on occasion, writers like me.
It would have been better to not convert to HST at all than to have converted and risked reconverting to PST three years later. But that’s what we’ve got now. And to be fair to Mr. Vander Zalm, Bill Tieleman, Chris Delaney and NDP Leader Adrian Dix, they won, didn’t they?
Second, some members of the business community, which arguably stood to gain from the efficiencies inherent in all VAT taxes, were not on board until it was too late, or they were tepid in their support, or they weren’t on board at all. The B.C. Restaurant and Foodservices Association, for one, never fully came on board in support of the HST. One client of mine in the restaurant business told me when future provincial governments inevitably add 7-per-cent PST to restaurant meals – which were always subject to PST in Ontario anyway – B.C. restaurants may end up regretting the fence their associations sat on, as they won’t be entitled to the corresponding input tax credits they would have received under HST. This is especially true for restaurant construction and renovation costs (remind me not to tell them “I told you so”).
Third, it should have been brought in at 10 per cent on implementation. It’s hard to fight a tax reduction.
Fourth, although the health care system, the education system, pensions, social assistance, legal aid, the justice system, the police and fire departments, and countless other important public services are funded through the tax system, no one really wants to pay tax if they can help it. Given the opportunity, and in the absence of something like a war, the majority of people would rather vote against a tax than vote for one. That’s human nature. If the referendum had been to extinguish the 7-per-cent PST and replace it with nothing, we’d have seen a similar result.
So having a province-wide referendum to implement a tax that added 7 per cent to the price of restaurant meals, haircuts and dance lessons – and admittedly, other services that were not taxed under the old PST – was probably doomed to fail. The legislature should have legitimized the tax. That is what legislatures are for. Otherwise, let’s get rid of them altogether and have referendums on everything.
The genie may be out of the bottle for future tax initiatives, though. If there’s a precedent set to hold a province-wide referendum to convert PST to HST, should there be referendums on increases to personal or corporate tax rates as well?
Fifth, if you’re going to hold a referendum on something as important to the future of the province as the HST, then you, as the government of the day, ought to have taken charge of the question. The question, drawn up by Elections BC, was a disaster. It should have read: “Are you in favour of keeping the HST, and keeping the $1.6-billion the federal government paid the province for transition costs, and the increased rebates paid to pensioners and the poor,” or “Are you in favour of scrapping the HST, eliminating the extra rebates paid to pensioners and the poor, and increasing other taxes to repay the federal government the $1.6-billion it paid B.C. in transition costs?”
Do those questions look political? You bet. But anyone that doesn’t think tax policy isn’t political is kidding themselves.