After a month of mounting criticism of the B.C. government's decision to move to a harmonized sales tax, Premier Gordon Campbell's supporters found their voices just in time for the return to political business in the capital today in Victoria.
A cluster of the province's top business leaders assembled yesterday - 19 of them arrayed along a table that stretched nine metres - to sing the praises of Mr. Campbell's unexpected decision to adopt the HST.
But missing from the lineup were representatives of the industries most vulnerable to a loss of consumer confidence when the new tax shows up at the till: hospitality services and home builders.
The new HST, which will create a single 12-per-cent tax on most goods and services in B.C. starting next July, has fractured traditional alliances and provided the opposition New Democratic Party with a strong issue to exploit when the legislature resumes sitting today.
Jock Finlayson of the Business Council of B.C., one of the leading proponents of the change, said following Ontario's move on the HST will stimulate investment and create jobs. Right now, businesses in B.C. pay about $1.9-billion a year in provincial sales tax that they will be able to recoup under the new system.
"The economic pie in British Columbia will grow faster and healthier as a consequence of this tax change," he said. The Business Council is one of 26 business organizations that stepped up to endorse the tax change.
But even the defenders of the new tax conceded yesterday that merging the provincial sales tax with the federal GST will leave some scars.
"It's our hope that down the road, the industry sectors that are most hurt by this particular initiative will get the attention of government and there will be ways and means found to mitigate against a lot of the damages," said John Winter, president of the B.C. Chamber of Commerce.
While Mr. Winter's organization has lobbied for the change for years, the announcement in July that B.C. will move to the HST took him by surprise. Mr. Campbell's Liberals maintained during the spring election campaign that they were not entertaining such a change.
Blending the B.C. sales tax with the GST means consumers will pay more for a large number of goods and services that are currently exempt from provincial sales tax. Mr. Finlayson and others argued that the tax shift will eventually result in lower prices.
The Ontario government is planning to send out cheques to help consumers through the transition, but B.C. Finance Minister Colin Hansen said yesterday he's not planning to follow suit. He said the $1.6-billion inducement Ottawa is offering the province will help pay for public services at a time when the province's expenses are rising and revenues are plummeting.
Mr. Hansen, who will bring in a new budget next week, agreed consumers will be pinched initially. "There is a slight, short-term impact that will happen. It's not as big as people are making it out to be," he said.
But Ian Tostenson, president of the British Columbia Restaurant and Foodservices Association, said his members are "really scared" by the tax change - especially coming in the midst of a recession.
The hospitality industry and home builders have been meeting with the province to look at mitigating the impact but he said he has not seen any solutions yet.
In the meantime, he said, there is a simmering tension between some sectors of business and the Liberal government. "In this election we supported this government strongly," Mr. Tostenson said. His group lobbied against the New Democratic Party because of its proposal to raise the minimum wage.
"I don't think it's in anyone's interests to throw this government out of power," Mr. Tostenson said, "but I think we are having a temporary problem in our relationship."
Peter Simpson, CEO of the Greater Vancouver Home Builders' Association, said despite tax relief for new home buyers, the change will still add thousands of dollars to the cost of a new home.
"We understand they must have problems with their budget, but we don't feel this should be borne by buyers of new homes," Mr. Simpson said. His association is asking the government to promise to make the new tax neutral so that the current tax burden on a new home won't climb next July.