Stephen Hui

Vancouver resident Rick Watts hawks HST barf bags before a rally at Kitsilano Secondary School.

Before the 2009 provincial election, Peter Simpson had a hunch that B.C. politicians would want to copy their Ontario counterparts and combine the GST with the provincial sales tax. By the start of the B.C. campaign, the federal government had already promised Ontario $4.3 billion over two years to do this. So Simpson, CEO of the Greater Vancouver Home Builders’ Association, knew there would likely be a big cash incentive for B.C. to harmonize its provincial sales tax with the GST. That’s why he distributed a questionnaire to all of the politicians in the B.C. legislature in advance of the election asking if their party would “promote HST” and, if so, what would be done to preserve housing affordability.

None of the MLAs wrote back to him. “However, the [B.C.] Liberal party responded,” Simpson told the Georgia Straight in a recent phone interview. “In their response, they defended the current provincial tax system and poked holes in the HST process—and said it would reduce their flexibility to raise or lower taxes provincially if they brought the HST in.”

In its letter to Simpson, the B.C. Liberal party noted that there are no provincial sales taxes on energy-efficient appliances, club and gym membership fees, newspapers and magazines, restaurant meals, and the professional services of architects and accountants. But the provincial sales tax would be extended to these areas under the HST. “In short, a harmonized GST is not something that is contemplated in the B.C. Liberal platform, but we are committed to improving the tax system,” the party declared.

Ten weeks after the May 12 election, Premier Gordon Campbell and Finance Minister Colin Hansen announced that a 12-percent HST would be introduced effective July 1, 2010. As a result of this, the provincial tax will be extended to all the areas mentioned in the B.C. Liberal letter to Simpson. And in return, the B.C. government will receive $1.6 billion from the federal government to cover “transition” costs.

“We understand that the HST is going to help some industry sectors, but it sure as hell isn’t going to help home-building and home-renovation companies,” Simpson said, acknowledging that the HST won’t apply to resale housing.

The backlash was on display when a couple of hundred people gathered at Kitsilano secondary school on April 6. Former Social Credit premier Bill Vander Zalm was there to launch his provincewide petition drive to eliminate the HST, right in the midst of Campbell’s constituency of Vancouver–Point Grey. On the steps outside of the school and in the hallways, volunteers eagerly shoved pamphlets into the hands of anyone interested in receiving them.

The centre spread of one leaflet featured a list of 70 products and services on the “HST Hit List”, which will have a new seven-percent provincial surcharge on top of the GST. They include new homes, real-estate fees, strata fees, rents, home maintenance, and home renovations. In front of a supportive crowd in the school auditorium, Vander Zalm told a long story about how he decided to launch a provincial crusade against the HST, which he characterized as a “bad tax”.

“There’s an old saying: if you want to make something look good, you have to lie,” Vander Zalm claimed. “And you have to lie over and over. And that’s what’s been happening.”

In a phone interview with the Straight a day before the rally, Vander Zalm said that the B.C. Liberal government is creating a “horrendous mess” by extending the provincial sales tax at this time. “It’s going to impact housing—new housing—tremendously,” he predicted.

The former premier claimed that home renovators in the East Kootenays and the Peace River region will have to start collecting money under the table just so they can compete with entrepreneurs based in Alberta, which has no provincial sales tax. “If you’re a contractor in Alberta, you can move into B.C. and be very competitive,” he said. “You just work out of your Alberta office.”