Since Conservative Prime Minister Mulroney sneaked in the GST behind the U.S. Free Trade Agreement, and Canadians forgave Jean Chretien’s Federal Liberals for lying about abolishing it, this was the first organised tax revolt in Canada’s recent history. Mobilised by BC’s ex-premier Bill Vander Zalm, the rebels collected 705,000 signatures for a petition to abolish the HST
, leading to Premier Gordon Campbell’s resignation. Now the new premier Christy Clark hopes that she can sell the tax and spoil Canada’s First Tea Party.
TV ads claim that the government has listened to the people, and will reduce the HST from 12 to 10-percent. What the ads don’t mention, and as Bill Vander Zalm emphatically points out, is that the reduction will take place over 3 years if BC Liberals are still the government and they manage to get the federal government's approval, since HST is now a federal tax.
Yesterday Elections BC
started distributing a pamphlet titled “HST Referendum Voters Guide”, which outlines the opposing parties’ arguments for and against the tax. Pro-HST camp says the tax is good, because it’s good for business, and what’s good for business is good for creating jobs and for small business. Opponents of the tax argue that it’s bad for business since it shifts the burden to consumers and discourages consumption, and it’s especially bad for small business that caters to a BC clientele. They point out to the Atlantic provinces where HST has not made any positive economic impact.
The anti-HST movement got a highly vocal support from Vancouver’s local Chinese merchants last week who declared that HST is hurting their businesses and may drive many merchants out of business. They want the HST gone.
NDP launched an anti-HST campaign
Contrary to the message conveyed by government’s TV ads, the issue is not the convenience and efficiency of combining two different taxes into one. Through HST the Province has crept into territories that were not taxable under the Provincial Sales Tax before, such as restaurant food
and processed groceries, newspapers and magazines, consultant fees, and new homes over $525,000, among others. Since HST paid by registered businesses is refundable unlike the PST, the cost of the tax is borne squarely by BC’s consumers.
While HST may be a windfall for multinational corporations, exporters and businesses selling essential goods and services, it’s disputable if this tax break has any benefit to businesses catering to local BC clientele. Budgeting 101 teaches that you tax whatever you want the people to buy less of, and that’s especially true for all non-essential goods and services, such as muffins, lattes, hair styling, and having someone else roast your chicken for you.