Rick Jeffery.

By Rick Jeffery

It’s a shame that voters are more upset about the way the HST was announced than about the tax itself. Unfortunately, the benefits the harmonized sales tax will bring to the province are being lost in rhetoric as the grassroots revolt led by ex-premier Bill Vander Zalm continues to gain steam. With Vander Zalm’s tarnished history in this province, one has to wonder about his true motivation and agenda.

But for the forest industry, which is still struggling through the worst financial crisis since the Great Depression and at the same time being significantly impacted by a high Canadian dollar, the HST is a lifeline.

Since the economic crisis in 2008, on the coast there has been a 40 percent employment loss in forestry and manufacturing. Manufacturing is less than half the size it was a decade ago on the coast. Some economists predict the Canadian dollar will trade as high as US$1.20 causing even more hardship to wood products manufacturers and exporters. Each one-cent movement of the Canadian dollar means a loss in revenue of $90 million for the B.C. forest sector.

We’re in survival mode and are bracing ourselves. Ninety percent of forest products are sold in U.S. dollars. The fast pace in which the Canadian dollar has gained strength presents a serious challenge to the coastal industry, especially in the markets for our high-value products, which are disproportionately impacted by the rising dollar.

As the Conference Board of Canada recently reported, Canadian businesses have no option but to boost productivity through investment in equipment and machinery in response to the rising Canadian dollar. This is where the HST comes into play.

The coastal forest industry views the HST through a competitive lens. With the introduction of the HST, B.C.’s resource and manufacturing sectors are expected to benefit significantly, the forest sector alone paying $140 million less in investment-killing taxes. In addition, the removal of the PST makes the playing field more level with competitors around the world not subject to this taxation.

The HST is like a shot in the arm for our forest companies at a time when we are fighting for market share in competitive markets like Japan and China. When fully phased-in, it will result in B.C.’s taxes on business investment being lower. This means coastal communities will be an attractive place for investment, which in turn creates long-term, stable, and well-paying jobs.

And while many negative things are being said about the HST, evidence in jurisdictions around the world that have switched to consumption taxes shows overall prices paid by consumers have gone down over time. This is because savings companies realize down through the supply chain when equipment and supplies are purchased are passed on to consumers in the end. But most importantly, evidence in other countries and provinces with similar tax structures shows that the HST leads to higher levels of investment, higher wages, and a higher standard of living.

Looking forward, the coastal forest industry isn’t expected to begin recovery until next year, so we are definitely not out of the woods yet. Voters are outraged and we understand that. But the HST is critical for the future of our industry. We need it to help us restore jobs and get people back to work in our province.

Rick Jeffery is the president and CEO of the Coast Forest Products Association.