As of Friday it will have been a year since British Columbia instituted the harmonized sales tax, and just like Donald Trump when he was painfully hogging the U.S. political spotlight, former B.C. premier Bill Vander Zalm has been getting a little too much attention on his quest to overturn the HST, arguing it is a windfall for big companies at the expense of small businesses and the ordinary consumer. With a provincial referendum on the HST under way, I expect we'll be hearing more from him.
Interested observers should also consider the conclusions of an independent and “non-political” report released May 4 by a special HST panel chaired by former Alberta finance minister Jim Dinning. The panel concluded that “staying the course” with HST would create 24,000 new, better-paying jobs by 2020, produce an additional $1.3 billion in exports of goods and services, and result in an economy that will be $2.5 billion larger than it would have been under PST. Moreover, it stated, going back to PST would cost the province dearly in terms of competitiveness, business efficiencies and lost revenue. What's more, British Columbia taxpayers will have to pay back all or most of the $1.6 billion the federal government handed the province to make the transition, leaving a $531-million hole in the next budget.
When the HST was introduced in B.C., it was a shotgun marriage between incompetency and arrogance. The governing Liberals introduced the tax as a replacement for the 7% PST immediately after a provincial election in which the topic was never discussed, and without a post-election debate in the legislature. It should have cost someone their job, and from former premier Gordon Campbell's perspective, it did. His.
On that front, Vander Zalm was right to complain. He got the pound of flesh he wanted, as well as Campbell's head on a platter, so now it's time for him and his anti-HST partners, Bill Tieleman and Chris Delaney, to do some math and study the findings of the Independent Panel on HST, because going back to PST would be disastrous for the province.
Vander Zalm, Tieleman and Delaney have argued in their own report, “HST or PST: The Truth About Why Returning to the PST Is Better for B.C.,” that HST “hurts the people least able to afford it.” The special panel found otherwise. It confirmed that low-income British Columbians are better off under HST than PST. Low-income individuals and families receive an HST credit of up to $230 a person each year to offset the HST. So a low-income family of six that is currently receiving an HST credit of $1,380 a year will see that credit drop to $150 a year if the PST is resurrected. If HST fails, 1.1 million individual British Columbians who now receive the much larger HST credit will have to go back to a PST tax credit of only $75 a year.
If the HST survives the mail-in vote, the rate will go down to 11% on July 1, 2012, and down again to 10% on July 1, 2014, at which time B.C. and Saskatchewan will have the lowest combined sales-tax rates in Canada – leaving aside Alberta, which doesn’t have a provincial sales tax. Additionally, families in B.C. will receive a one-time payment of $175 a child to deal with the extra expenses they have incurred since the switchover to HST. B.C. seniors will also receive $175 if their net family income is $40,000 or less – if their income is more than $40,000 but less than $50,000, they will receive a partial rebate.
