Lorne Gunter: BC HST referendum, glorious win for bad policy
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Lorne Gunter | August 29, 2011 1:00 PM ET
More from Lorne Gunter | @lornegunter
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The B.C. referendum to repeal the Harmonized Sales Tax is a mess – a wonderful, happy, victorious mess.
It was announced last Friday that the province’s voters had voted overwhelmingly to “extinguish†the single, blended provincial sales
tax/GST combination and go back to having two separate taxes, one collected by Ottawa, the other by Victoria.
In the end British Columbians didn’t vote out the new tax as overwhelmingly as many had predicted. The final tally was 55% for repeal, 45% for retention, even though for the past two years polls have been showing opposition to the HST running at 75% or higher.
This is going to cost B.C. taxpayers, employers and consumers a fortune.
First, the provincial government will have to pay Ottawa back the $1.6 billion the feds gave the province for agreeing to harmonize its old PST with the GST into a single consumption tax.
Since B.C. will likely have to borrow the money to repay Ottawa, axing the HST will add upwards of $85 million in annual interest payments to the provincial budget. Then there is the cost to the government and to retailers of getting ready to collect two separate taxes again. Scores of new civil servants will have to hired and entrepreneurs will have to revert to collecting two separate levies on two different lists of goofs, then making
sure they pay the right amount to two separate tax collectors.
Just reprogramming all the cash registers in the province will cost millions of dollars in staff hours and technicians fees. Then there is the fact that the HST is currently 12% and scheduled to be dropped to 10% in 2014, a reduction that won’t happen now. So the referendum defeat of the HST will be a burden on consumers, too.
And none of this even touches the economic cost, which could run to hundreds of millions of dollars as businesses struggle with an inefficient
pair of taxes applied to an uneven list of goods and services.
So why is this mess so wonderful, happy and victorious? Because it is a triumph for the people and a repudiation of dishonest politicians.
It’s hard to imagine a more deceitful public policy introduction than the HST in B.C.
In 2009, the B.C. Liberals under their then-leader Gordon Campbell won re-election to a third term party because, in part, during the campaign they promised a PST/GST harmonization was “not on the radar screen.†Just 10 weeks later, they not only went back on that promised and announced an HST was coming, they had the gall to insist imposing this new tax would be “single biggest thing we can do to improve B.C.’s economy.â€
But the insincerity didn’t end there – not even close.
While admitting that the HST would cover the same goods and services as the GST – a much longer list than that covered by the PST – the Campbell government thought it could also convince British Columbians that the new tax would be “revenue neutral.†For example, the HST would apply to used cars, boats and planes, items the old PST had exempted. So anyone buying a used vehicle or vessel would have to pay hundreds of additional tax dollars, something that was plain to everyone, but which the Campbell government tried to convinced people was not happening.
By some estimates, the HST would have added as much as $600 to the average family’s tax bill. That’s hardly neutral.
Then, after the provincial Liberals were finally forced to admit their new federal-provincial tax amounted to a revenue grab, they tried to sooth voter anger by promising an equivalent reduction ($616 a year) in personal income tax. That would have been an excellent economic move – shifting a big chunk of tax burden from an income tax to a consumption tax – and it might have been a smart political move, too. The problem was, before the income tax cut could be made, Premier Campbell pulled the rug out from under taxpayers and cancelled the cut. British Columbians would be paying more for the HST after all.
After that, everything the Liberals said about the HST had so little credibility they had to establish an independent board through which all claims about the HST and its effects had to be vetted.
After all of that, it’s a wonder just 55% of B.C. voters cast ballots to repeal the GST. After such a string of easily disprovable falsehoods, it would not have surprised if two-thirds or more of B.C. electors dumped the hated tax.
What this truly is, is a victory for B.C.’s citizens’ initiative and recall legislation. Alone among provincial voters, British Columbians have the right to overturn provincial legislation if they can get enough signatures on a petition to force a referendum. They can also recall provincial politicians who fall out of favour.
The thresholds are high for forcing and winning a referendum. To get an initiative placed on a province-wide ballot, hundreds of thousands of signatures are required across the province, equivalent to 10% of electors. As well, the same threshold must be met in each of the province’s 85
ridings. Then in the subsequent vote, the initiative must win not only a majority province-wide, but in most of the ridings, too.
Not since 1995 when the initiative law came into effect has a question made it on the ballot, much less won. For democracies to be truly responsive to citizens, though, such “direct democracy†must be possible.
That’s while the B.C. outcome is so glorious. Even though it is the wrong result in technical, economic terms, it succeeds in re-establishing
British Columbians as the masters in their own homes again.
National Post"
Republish Reprint
Lorne Gunter | August 29, 2011 1:00 PM ET
More from Lorne Gunter | @lornegunter
Twitter Google Reddit Email Typo? More
The B.C. referendum to repeal the Harmonized Sales Tax is a mess – a wonderful, happy, victorious mess.
It was announced last Friday that the province’s voters had voted overwhelmingly to “extinguish†the single, blended provincial sales
tax/GST combination and go back to having two separate taxes, one collected by Ottawa, the other by Victoria.
In the end British Columbians didn’t vote out the new tax as overwhelmingly as many had predicted. The final tally was 55% for repeal, 45% for retention, even though for the past two years polls have been showing opposition to the HST running at 75% or higher.
This is going to cost B.C. taxpayers, employers and consumers a fortune.
First, the provincial government will have to pay Ottawa back the $1.6 billion the feds gave the province for agreeing to harmonize its old PST with the GST into a single consumption tax.
Since B.C. will likely have to borrow the money to repay Ottawa, axing the HST will add upwards of $85 million in annual interest payments to the provincial budget. Then there is the cost to the government and to retailers of getting ready to collect two separate taxes again. Scores of new civil servants will have to hired and entrepreneurs will have to revert to collecting two separate levies on two different lists of goofs, then making
sure they pay the right amount to two separate tax collectors.
Just reprogramming all the cash registers in the province will cost millions of dollars in staff hours and technicians fees. Then there is the fact that the HST is currently 12% and scheduled to be dropped to 10% in 2014, a reduction that won’t happen now. So the referendum defeat of the HST will be a burden on consumers, too.
And none of this even touches the economic cost, which could run to hundreds of millions of dollars as businesses struggle with an inefficient
pair of taxes applied to an uneven list of goods and services.
So why is this mess so wonderful, happy and victorious? Because it is a triumph for the people and a repudiation of dishonest politicians.
It’s hard to imagine a more deceitful public policy introduction than the HST in B.C.
In 2009, the B.C. Liberals under their then-leader Gordon Campbell won re-election to a third term party because, in part, during the campaign they promised a PST/GST harmonization was “not on the radar screen.†Just 10 weeks later, they not only went back on that promised and announced an HST was coming, they had the gall to insist imposing this new tax would be “single biggest thing we can do to improve B.C.’s economy.â€
But the insincerity didn’t end there – not even close.
While admitting that the HST would cover the same goods and services as the GST – a much longer list than that covered by the PST – the Campbell government thought it could also convince British Columbians that the new tax would be “revenue neutral.†For example, the HST would apply to used cars, boats and planes, items the old PST had exempted. So anyone buying a used vehicle or vessel would have to pay hundreds of additional tax dollars, something that was plain to everyone, but which the Campbell government tried to convinced people was not happening.
By some estimates, the HST would have added as much as $600 to the average family’s tax bill. That’s hardly neutral.
Then, after the provincial Liberals were finally forced to admit their new federal-provincial tax amounted to a revenue grab, they tried to sooth voter anger by promising an equivalent reduction ($616 a year) in personal income tax. That would have been an excellent economic move – shifting a big chunk of tax burden from an income tax to a consumption tax – and it might have been a smart political move, too. The problem was, before the income tax cut could be made, Premier Campbell pulled the rug out from under taxpayers and cancelled the cut. British Columbians would be paying more for the HST after all.
After that, everything the Liberals said about the HST had so little credibility they had to establish an independent board through which all claims about the HST and its effects had to be vetted.
After all of that, it’s a wonder just 55% of B.C. voters cast ballots to repeal the GST. After such a string of easily disprovable falsehoods, it would not have surprised if two-thirds or more of B.C. electors dumped the hated tax.
What this truly is, is a victory for B.C.’s citizens’ initiative and recall legislation. Alone among provincial voters, British Columbians have the right to overturn provincial legislation if they can get enough signatures on a petition to force a referendum. They can also recall provincial politicians who fall out of favour.
The thresholds are high for forcing and winning a referendum. To get an initiative placed on a province-wide ballot, hundreds of thousands of signatures are required across the province, equivalent to 10% of electors. As well, the same threshold must be met in each of the province’s 85
ridings. Then in the subsequent vote, the initiative must win not only a majority province-wide, but in most of the ridings, too.
Not since 1995 when the initiative law came into effect has a question made it on the ballot, much less won. For democracies to be truly responsive to citizens, though, such “direct democracy†must be possible.
That’s while the B.C. outcome is so glorious. Even though it is the wrong result in technical, economic terms, it succeeds in re-establishing
British Columbians as the masters in their own homes again.
National Post"
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