Tuesday, June 15, 2010

The HST Looms!

As July 1, 2010 races towards us with the promise of an entirely new and exciting tax regime right here in beautiful British Columbia I just sort of thought I might take another look at the latest way the L.O.G. (Liberal Occupying Government) in Victoria has decided to suck money out of my dust-crusted wallet. Those who say the Harmonized Sales Tax (HST)is good for the province and all who live here (not counting Liberal politicians of course) are business owners, think tanks and "leading economists". A letter from BC minister of finance, Colin Hansen, posted online at www.gregbuck.ca/hst.html says, "the leading economists and think tanks tell us that the introduction of the HST is the single biggest thing we can do to improve our economy..." Of course one hopes that these are not the same leading economists who completely failed to see the 2008 economic meltdown coming, but I suspect they are.


Colin Hanson implementing the HST

As I understand it the HST is supposed to make British Columbia more competitive by essentially removing some taxes from the business community. The example Colin uses in his online letter (or rather, one of the examples) is that of a 2x4 chunk of lumber. That 2x4 has a number of PSTs (Provincial Sales Tax) already embedded in its cost, from the PST charged on the axe that a tree-chopper buddy wields in the deep bush to the PST charges for the forklift polish used to shine up the forklift at the lumber-yard. Under the HST, "companies are refunded the PST on items they buy to carry on their business." This is expected to remove almost 2-billion dollarses from the business community's tax burden per year. Well, that's nice.

But the obvious question is, why not just take the PST off of business related items now? Why change the entire sales tax regime? Well, as Colin says, "the revenue generated from the HST will be about the same as the revenue projected from the current PST system." In other words the HST is revenue neutral compared to the current PST. No more or less money will be brought in to the government. If the government just removed the PST on business related items then they (the government) would be out by nearly 2-billion bucks a year. With the HST money can be raised from other areas. What other areas? Grab yourself a mirror and take a good look since we British Columbians will be picking up that particular tab.

Okay, that sucks, but wait, there's more! Maybe I'm just not looking at the big picture, after all if all sorts of super-smart economists, all of whom went to school and got good grades and stuff, say that the HST is going to be a good thing, what am I missing? I gots to say, being uneducated is such a trial. So; economist Roslyn Kunin, who is also the director of the BC office of the Canada West Foundation, wrote in the newstabloid the Province regarding the HST. It is unfortunate that she chose to write with a question/answer style but then she is an economist not a writer. The questions she uses are, to my mind, desperately general, the first being, "Are you or anyone you know ever likely to want to have a job in this province?" I mean, how sad is a question like that? I have chosen to generously ignore the question part and focus on her answer to her own question which is that with reduced taxes BC companies will be more competitive, thus selling more and hiring more employees due to increased demand for their products or services. Of course this rests on the theory that companies will pass their tax savings on the the consumer. Ms Kunin points out that in the private market, "all it takes is for one company in each sector to try to increase its market share by passing on the savings as lower prices and all others have to follow or risk losing customers." Sure, just like the gas companies, right? A quick drive down any main drag shows that every gas station in sight has the exact same price, or is this another one of those "special cases" like the booze companies that have already said they will not be lowering their prices after the HST kicks in and their taxes are reduced. I wonder how many other "special cases" there are? http://www.theprovince.com/business/Guest+column+Economist+questions+opponents/3134676/story.html
Another question Ms Kunin asks is, "Why do you want to deny the benefits of the HST to the poorest citizens of BC who will gain the most from its implementation?" Let's see, according to the BC government (http://hst.blog.gov.bc.ca/wp-content/uploads/2010/05/GST_PST_HST_List_v04.pdf) The poor will be paying more for newspapers, magazines, school supplies, smoke detectors, adult sized clothing for children, used adult clothing, residential phone service, appliance repair, over the counter medications, vitamins, and lots more. That is one benefit I could definitely do without. So to offset the benefit of paying more the government will give a tax rebate to the poor. Well, if an economist such as Roslyn Kunin says this is better then who am I to say what a bundled load of crap it all is. Hmm? Hahh? Hmm?

I have read a fair amount of what the pro and anti HST squads have to say, but looking to somewhere in Canada where there is already an HST can be instructive too. Possibly even instructiver. In 1997 three Canadian provinces signed up for the HST, Newfoundland/Labrador, Nova Scotia and New Brunswick. Previous to the HST theirs combined sales taxes (GST and PST) were between 19% and 18.7% and after the HST they dropped to 15%, then later to 13%. Of course the citizens would have been in favour of that but what other benefits have their been? I bet a TON of jobs must have been created, right? Isn't that one of the expected benefits of the HST? Well in 1997 the unemployment figures were: NF/L - 16.4%, NS - 10.2% and NB - 10.4%. In February 2009, twelve years after they instituted the HST the figures were: NF/L - 15.9%, NS - 9.5% and NB - 8.8% (incidentally - BC in 1997 was 8.1% and in Feb. 2009 was 8.3%). Not exactly a stunning improvement. The two provinces with the healthiest employment numbers are Saskatchewan and Manitoba, neither of which want anything to do with a HST (in fact in 1991 Saskatchewan had a HST and they couldn't get rid of it or the provincial government that brought it in fast enough). Incidentally, Nova Scotia will be raising their HST to 15% on July 1 this year. Happy Birthday Canada!

So, I have signed the anti-HST petition and I hope that my fellow British Columbians have educated themselves enough to make an informed decision on whether to sign or not. Now, does the L.O.G. have to pay attention to the petition? Depends on who you listen to but my thinking is that they ignore it at their own risk. Remember the federal Conservatives after they inflicted the country with the GST (Goods and Services Tax)? They were nearly wiped out as a party and then PM Brian Mulrooney is still considered by many to be a bigger waste of space than a rusty car on blocks in a rednecks living-room. It took a kiss of life by the Reform Party for the Conservatives to get back in the federal political game and even then they have yet to form a majority government. Oh well, I'm sure the L.O.G. know what they are doing.

Anyway... Humouroceros

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