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HST 'letter' challenges arguments against tax

I've discovered a YouTube video that's about to go viral and make its creator an Internet sensation.

At least in British Columbia.

It's not a new song by Justin Bieber or Lady Gaga, and it doesn't feature giggling babies or dancing dogs. It's about the HST, a topic I'll be discussing quite a bit over the next few weeks.

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Everyone in B.C. who pays HST, everyone who is receiving an HST input-tax credit, everyone who is receiving an HST rebate cheque, everyone who owns a business, everyone who works for a business, everyone who is unemployed or on a fixed income, and everyone who doesn't like it when they're being hoodwinked, should click here and watch "A letter to Bill Vander Zalm."

It's faaaantastic. And it could be a game changer in the province's HST debate in the leadup to a province-wide referendum on the future of the tax that starts June 24.

The video was created by UBC law student Chris Thompson. I've never met him, but I predict he will have a long and successful career in law, politics, economics, public relations, business, the teaching profession, the movie industry, journalism, stand-up comedy, or all of the above.

What he's done using social media is what former premier Gordon Campbell, the entire B.C. Liberal caucus, the country's leading economists, and new Premier Christy Clark have been unable to do very well when confronted by the public's anger about the introduction of the HST, and a misunderstanding of the tax's benefits when compared to the old PST.

That misunderstanding was fuelled (much like gasoline on a fire) by former premier Bill Vander Zalm who, I must remind everyone, cost B.C. families many thousands of dollars when he introduced the Property Transfer Tax on the sale of real estate when he was premier. Mr. Vander Zalm, the leader and main spokesperson for FightHST, was compelled to resign as premier in 1991, due to a conflict-of-interest scandal arising from the sale of his own real estate development, Fantasy Gardens.

In "A letter to Bill Vander Zalm," Mr. Thompson has done the math and he has read and re-read the latest report posted on Mr. Vander Zalm's FightHST website, called "HST or PST? The truth about the HST and why returning to the PST is better for BC."

Mr. Thompson has gone through all of the arguments against HST and he has checked and re-checked Mr. Vander Zalm's assertions and his sources in much the same way a high-school teacher or university professor might check a student's work (for things like accuracy, proper quoting of sources, intellectual integrity, and sound thinking).

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Watch the "letter" video and you'll see how Mr. Vander Zalm's "Truth about the HST" misquotes from its sources, and claims things were said in expert reports and newspapers that weren't really said. It cherry picks statistics, it misrepresents facts, it makes assertions that its own sources contradict, and it is filled with so many inaccuracies and half-truths, that after viewing the 15-minute video, you might think the report's authors either weren't the sharpest knives in the drawer, or they were lying to you. Or both.

You decide.

"The HST hurts families, seniors and low-income people most," Mr. Vander Zalm's report says.

But Mr. Thompson goes to Mr. Vander Zalm's own sources to show that lower-income people are actually better off under HST than PST. In fact, low- and fixed-income earners receive $230 a year as an HST rebate. But 1.1 million British Columbians who now receive the much larger HST rebate will have to go back to a PST tax credit of only $75 a year if HST fails.

"HST kills jobs and hurts the economy," Mr. Vander Zalm's report says, arguing "Alberta – with less resources, a smaller population base, no HST or sales taxes, and no MSP premiums – has lower unemployment, a lower cost of living and a stronger economy. Clearly, the HST is not necessary to stimulate economic growth."

Mr. Thompson narrates this in response: "Really? You don't think oil has anything to do with this? Bill, we're not that stupid."

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Mr. Vander Zalm argues the 12-per-cent HST applies to a massive list of goods and services that were previously not taxed. But if you look at Mr. Thompson's video, you'll see the basket of goods and services that were not already subject to PST is relatively small. And yes, we all know about restaurant meals and dance lessons, but are we that upset that "horse boarding" will now be taxed?

To be clear, 80 per cent of the goods and services now subject to B.C. HST were always subject to 7-per-cent PST and 5-per-cent GST. And frankly, taxing the sale of goods but not services is discriminatory. If you tax the sale of shoes to pay for health care and education, why not tax dance lessons as well?

"HST is unnecessarily complicated," Mr. Vander Zalm's report claims.

Mr. Thompson doesn't say it, but I will. No, Bill, its not. It's no more complicated than filing for GST, which all businesses have to do anyway, including mine. There's only one return to file, not two, so it's actually a lot easier. Talk to anyone with a small business about the Byzantine rules and exemptions that applied to PST and they'll tell you how much easier the HST is. They'll also argue it's better for their businesses because it is less cumbersome than PST and they get input tax credits. My clients, many of whom are small-business owners, uniformly tell me: "good riddance to the PST."

"It's inflationary," Mr. Vander Zalm's report says of the HST. It cites an article in the Guardian newspaper as evidence of Britain's VAT being "inflationary," which misquotes the article, gets the numbers and the dates mixed up and leaves out crucial information such as higher food and energy costs – the real drivers of inflation in the UK. You don't believe me? Watch the video.

The way Mr. Thompson deals with Mr. Vander Zalm's argument that the Maritime province's HST has been increased to 15 per cent when it's actually been decreased from 19 per cent over the past decade is truly magical.

"The HST is a loss to provincial sovereignty and is a threat to democracy" Mr. Vander Zalm's report states. Well, if the HST is a threat to B.C.'s sovereignty, I guess so is the Canada Pension Plan, RRSPs, the Canada Health Act, Employment Insurance, the Trans-Canada Highway, the Canadian Armed Forces, the CBC, the Canada Student Loans Program, and the thousands of other federal government programs and initiatives that make me proud to be Canadian.

As for the HST being a "threat to democracy," Mr. Thompson suggests a greater threat is when people such as Mr. Vander Zalm abuse their notoriety to appeal to people's emotions rather than their brains and misconstrue facts and figures to do it, rather than relying on reason and sound argument to make their point. I couldn't agree more.

This is what we have to deal with in B.C. when no one challenges Mr. Vander Zalm, and the other FightHST leaders, who are, in effect, hoodwinking British Columbians into thinking the HST is worse for B.C. than the PST.

So you should view "A letter to Bill Vander Zalm" for a bit more balance.

You might also read It's Your Decision, a fair, intellectually honest and non-biased report on HST that was released on May 4 by an independent panel comprised of chair Jim Dinning – former finance minister of Alberta, Canada West Foundation chair, and chancellor of the University of Calgary – former B.C. auditor-general George Morfitt, Coast Capital Savings president and CEO Tracy Redies, and John Richards, professor of economics at Simon Fraser University.

The report admits that British Columbians making more than $10,000 a year will pay more under the HST than under PST. It even suggests the HST may have been a bit oversold when it came in during 2010.

But It's Your Decision also says that going back to the PST and GST "means turning away from the gradual future economic benefits expected with the HST. Those include a simpler sales-tax system now used by more than 140 other countries and a more competitive economy, where goods and services are cheaper to produce, boosting our exports, attracting investment and creating better-paying jobs."

The independent panel that wrote It's Your Decision did its own research and predicted that staying with the HST will lead to a B.C. economy in 2020 that is $2.5-billion larger than it would be under the PST. That's about $480 a person or $830 a family. It will produce an increase of $1.2-billion in exports of goods and services, and it will create an additional 24,400 better-paying jobs.

All these benefits have been ignored by FightHST.

A larger, more competitive economy that produces higher exports and creates thousands of new, better-paying jobs is a good thing. Or does Mr. Vander Zalm think a smaller economy with fewer better-paying jobs is better for B.C.? Someone ask him, please.

The biggest problem ignored by Mr. Vander Zalm is what British Columbia will do if the HST referendum fails and PST returns.

"The HST taxes the growing part of our economy — services — and will provide extra revenue to fund hospitals, schools, roads and other important public services you rely on," It's Your Decision states. "In contrast, moving back to the PST/GST will likely mean refunding the federal government $1.6 billion in transition money and, in the first year alone, put a $531-million hole in the provincial budget."

That's right. B.C. will have to repay the federal government all or most of the $1.6-billion paid to the province to convert to HST. So where's all that money going to come from? It's going to come from health care, education, legal aid, social services, and a host of other provincial government programs that will have to be cut or greatly reduced. And it will mean increased income taxes and user fees, including applying 7-per-cent PST to restaurant meals, dance lessons and horse boarding. It has to. How does Mr. Vander Zalm propose that this be dealt with? He can't just wish it away or bury it like some inconvenient fact. The money has to come from somewhere.

So with all the information that's coming out on HST prior to the June 24 referendum, it will be up to British Columbians to weigh the benefits of staying with HST against the costs of going back to PST.

Mr. Campbell is gone, and perhaps some of the heated emotion that linked the dislike for him with the dislike of the tax will dissipate and people will look at the facts much more carefully.

Special to The Globe and Mail

Tony Wilson is a franchise and intellectual property lawyer at Boughton in Vancouver, and he is an adjunct professor at Simon Fraser University. His newest book, Manage Your Online Reputation, was published in November.

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About the Author
Business Law Columnist

Vancouver franchise lawyer Tony Wilson practices franchising, licensing and intellectual property law. He is ranked as a leading Canadian franchise lawyer by LEXPERT and Who'sWho Legal, and he is an adjunct professor at Simon Fraser University.Mr. Wilson is head of the Franchise Law Group at Boughton Law Corp. More

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