On April 1st, as mandated by the citizens of British Columbia, our province abolished the hated and misunderstood HST (harmonized sales tax) and went back to the cumbersome PST (Provincial sales tax) /GST (Federal goods and services tax). Many British Columbians applaud this move as long overdue. They also believe they will now save loads of money. I believe they’re in for disappointment.
In most cases we’ll be paying the same as we did prior to April 1st. Granted, there are several areas where savings will be made: bike shops, restaurants, hair dressers, to name a few. In some areas, we’ll be paying more, most notably for our lower-income population: disposable diapers, home electricity and heating. And our struggling film industry and manufacturers will be hit hard by the loss of input tax credits.
Personally, I’ve never had a problem with the HST. It was a user tax, and as such, higher incomers, who eat out more often, can afford gym or golf memberships and those expensive coffees, shouldered most of the load. Low-income earners will now lose the government HST rebates they received to help offset any higher taxes they’d paid. For most businesses, the red tape reduction offered a more efficient method of taxation. It’s now believed with fewer tax deductions allowed under PST/GST and greater tax input on manufactured goods, businesses may well pass their higher costs on to consumers. And who’s to say all businesses that raised their prices because of HST will now lower them?
The Globe & Mail’s recent headline says a lot: Smart tax, botched introduction.
Back in May, 2009, Premier Gordon Campbell famously said HST “was not on its radar”. A mere three months later, with no public consultation, the Liberals announced the HST would be implemented in 2010. This resulted in a general public uproar and the formation of a grassroots movement led by ex-premier Bill Vander Zalm to “right the wrong and rid this province of an unfair tax”. A great deal of fear-mongering resulted, with misleading information given on both sides. The people of British Columbia were rightly angry with their elected officials and therefore ripe for brainwashing by the likes of Mr. Vander Zalm and his group. People reacted with emotion, rather than informed reason.
As a result, in a referendum in the summer of 2011, almost 55% of voters, despite the opinion of economists, voted to abolish the HST. That’s 55% of voters, mind you, not 55% of the population of BC. The vast majority didn’t care enough to vote. Interestingly enough, most higher-income earners voted to keep the HST while low-income earners voted against it. This shows how well Mr. Vander Zalm’s fear-mongering misinformation worked, because, in many ways, HST was a tax against the wealthiest of our population, with low-income earners receiving off-setting tax breaks.
Now almost 100,000 businesses have been required to register to collect PST, at a great cost of time, money and effort. The switch back will also cost our provincial government (ie: we, the people) some $3 billion, of which $1.6 billion is a payment from Ottawa that must now be refunded.
Bottom line is, the Liberal government was seen as not being truthful and the public is now even more sceptical of our political leaders (this isn’t necessarily a bad thing, IMHO). In an emotional knee-jerk response, British Columbians, wanting to punish the government, may have, to quote an old cliché, cut off their noses to spite their face, and in the end, no one benefits.