Gordon Campbell government shortchanges cyclists with introduction of HST

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      Vancouver bicycle retailer Bob Heilker knows what it’s like to live in a country that values cycling. The owner of the West Broadway store Different Bikes was born in North Vancouver but grew up in Holland, which is viewed as the Promised Land by some local cyclists. In an interview with the Georgia Straight in his shop, Heilker recalled taking a “roadworthy test” at his elementary school just outside of Rotterdam. This was a mandatory evaluation of students’ knowledge of cycling.

      “Everybody had to do it,” he said. “It was part of their curriculum.”

      Across the Netherlands, there are bicycle paths separating cyclists from pedestrians and vehicular traffic. Heilker contrasted that with Vancouver, where he doesn’t feel comfortable letting his young kids cycle on busy roads. “I was in Europe in November, and I had no problem with my kids riding downtown in big cities, whereas here I do,” he said.

      As a retailer, Heilker said, he was concerned when the provincial government scaled back the B.C. Scrap-It Program, which previously offered consumers $1,200 toward the purchase of a bicycle if they turned in an old, pollution-emitting motor vehicle. The B.C. Liberal government subsequently cut that back to $700.

      But one of his biggest business worries these days is the impending harmonized sales tax, which will add a seven-percent levy to bicycles and helmets, beginning on July 1. Since 1981, B.C. has not charged sales taxes on bicycles. The policy was introduced by then–Social Credit finance minister Hugh Curtis, who told the legislature that this move was “consistent with a healthier, quieter, and more energy-efficient society”.

      Heilker described the B.C. government’s plan to extend the provincial sales tax to bikes as a “bummer”, which will undermine alternative modes of transportation. “I think, initially, there will definitely be some backlash,” he said. “People will be reluctant to spend money on bikes because they have to spend an extra seven percent not just on the bikes, but on the accessories as well.”

      Victor Cuevas, owner of Rain City Bikes in Mount Pleasant, told the Straight by phone that this is not a good time for a new tax, because the cycling industry has suffered as a result of the global economic slowdown. However, he also expects an influx of customers before July 1, when the HST takes effect. “People who are going to be buying bikes over $1,000 will be more greatly affected than people who are spending $200 to $300,” Cuevas said.

      During the last provincial election campaign, Premier Gordon Campbell portrayed himself as a friend of the retail sector by promising to eliminate small-business taxes in 2012. Yet 10 weeks after the 2009 election, Campbell alienated many entrepreneurs by announcing that his government would harmonize its seven-percent provincial sales tax with the five-percent GST. This combined 12-percent tax would be extended to products and services not covered by the provincial sales tax, including bicycles and helmets.

      As a result of a July 2009 memorandum of agreement with the federal government, the province will collect a $1.6-billion signing bonus for integrating federal and provincial sales taxes. In addition, B.C. is permitted to provide rebates on the HST for five percent of the GST base for B.C. The memorandum exempted “motive fuels, children’s clothing and footwear, children’s car seats, feminine hygiene products and books” from the HST. The B.C. government has also exempted new housing purchases up to $525,000.

      The Ministry of Finance and the Ministry of Transportation and Infrastructure did not make their ministers or spokespeople available for comment by the Straight’s deadline. In the months before the 2009 election, the B.C. Liberal party’s largest political donor was the New Car Dealers Association of B.C., which contributed $229,700. The association was also the largest single donor to the B.C. Liberals in the period leading up to the 2005 election. The B.C. Liberals have likewise enjoyed strong financial support from real-estate developers.

      Usman Valiante, director of advocacy for the Bicycle Trade Association of Canada, told the Straight by phone that in the past the cycling industry had no national voice, unlike the auto sector and other industries. “The most fuel-efficient, environmentally efficient, and economically efficient form of transportation was virtually unadvocated for in a public-policy debate that was unfolding on greenhouse gases, transportation, and childhood obesity,” he said.

      He predicted that the imposition of the HST on bicycles and bike accessories will have a negative impact on consumers and retailers. “It’s classic economics,” he said. “You raise the price of something and the demand goes down.”

      Valiante said that his group met with Finance Minister Colin Hansen in October. It also provided Hansen with a written presentation, which pointed out that B.C. is a world leader in the design of mountain bikes. According to the BTAC, companies such as Kona, Norco, Rocky Mountain, Brodie, Cove, Dekerf, Race Face, Sugoi, and MacNeil employ about 400 people in the province. In addition, the BTAC stated that there are 304 independent bike dealers and accessory shops in B.C., employing about 1,200 people and generating annual sales of approximately $75 million. This doesn’t include bike revenue generated through big-box outlets such as Wal-Mart, Costco, and Canadian Tire.

      In an October 21 letter to Hansen, Valiante claimed that the net effect of the HST will be a “dead-weight loss of $5.2 million” to bicycle consumers in B.C. Valiante told the Straight that his association is urging the B.C. government to direct its HST revenue from his industry into cycling infrastructure.

      Others have called for a repeal of the HST on bicycles. Earlier this month, there was a rally of cyclists at the legislature. The same day, Lana Popham, the NDP MLA for Saanich South, introduced a petition in the legislature with 5,000 signatures, calling for the elimination of the HST on bikes on the grounds that cycling is beneficial to human health, the environment, and the economy.

      “Will the premier listen to the people in B.C. and scrap the HST?” Popham asked inside the legislature.

      Hansen replied that he found it “actually surprising” that Popham would want to get rid of a policy that will “eliminate a PST that saps jobs in British Columbia, and would resist the shift to an HST, which is going to be a job creator”. He acknowledged that some products, such as bicycles, will cost “a little bit more”, which is why the B.C. government created an HST tax credit that will help offset the cost of the expanded sales tax.

      “It’s also the reason that we have increased the basic personal exemption on income tax from $9,373 to $11,000 so that British Columbians have more money in their pockets to pay for the little bit extra on things like bike purchases,” Hansen said.

      On March 8, the B.C. government released a report by economist Jack Mintz, a strong proponent of the harmonized sales tax, that claimed the tax will increase capital investment by $14.4 billion and lead to a net increase in 141,000 jobs in B.C. by the end of the decade. Hansen has often defended the HST by saying it will allow businesses to claim inputs on sales taxes they pay for capital equipment, which will reduce their overall tax burden by $1.9 billion a year.

      However, Valiante remarked that these savings won’t be accrued by the Canadian bicycle industry because a great deal of the manufacturing takes place in Taiwan. He emphasized that Canadian companies add value by designing bikes, but stated that they won’t be able to claim tax credits on their business inputs for carbon-fibre manufacturing that takes place overseas. “It’s a straight-up tax increase at the point of sale,” Valiante said. “Another point we made to the minister is that in this particular industry, there is no offsetting benefit. So I think he recognized that.”

      In its presentation to Hansen, the BTAC stated that converting just two percent of the kilometres travelled annually by Canadian vehicles into bicycle trips would be the equivalent of taking 360,000 cars off the road. According to the BTAC, this would avoid the emission of a million tonnes of greenhouse gases every year.

      The association also pointed out that bicycles are already heavily taxed, given the 13-percent tariff on two-wheelers imported from developed countries. There are also antidumping duties of up to 64 percent, depending on the source of the imports, as well as the five-percent GST.

      Richard Campbell, a director of the B.C. Cycling Coalition, told the Straight by phone that by imposing the HST on bicycles, the B.C. Liberals are showing themselves to be worse than the Socreds on a key aspect of cycling. Like Valiante, Campbell wants the B.C. government to spend a great deal more on cycling infrastructure. In a submission to the legislative committee on finance and government services in October, the BCCC advocated annual provincial investments of $150 million over the next three years.

      The Ministry of Transportation and Infrastructure service plan lists expenditures of just $3 million on cycling infrastructure in each of the next three years. That’s down from the $6 million per year that one of the ministry’s 2009 service plans promised for 2010–11 and 2011–12. A provincial program called Bike B.C. was created with great fanfare a couple of years ago, and promised $31 million over three years.

      “It looks like there is significantly less in there,” Campbell said.

      He noted that Portland recently approved spending US$600 million on cycling infrastructure over a 20-year period, which is designed to increase the share of trips taken by cyclists to 25 percent. The BCCC director said the B.C. government wants to double the amount of cycling by 2020, but he doubts that can be accomplished with the current spending on infrastructure. “They’re getting $10 million a year from cyclists due to the HST coming into effect,” he said. “There is money being paid to them by cyclists that they could certainly use to reinvest.”

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      So lame...

      Mar 12, 2010 at 6:30am

      That people focus on a distraction like the effect on bicycle sales when it comes to something as important as the HST. Charlie Smith, you are such a blatant shill for the NDP, they should be counting your salary from the Straight as campaign contributions.

      How about writing a piece about the SUBSTANTIVE issues around it like loss of provincial autonomy in exchange for a measly $1.6 billion payout? Or maybe (heaven forbid!) a balanced look at the change in cost of running a business vs increase costs for the average consumer?

      Or maybe you ARE better off leaving those kinds of pieces to real journalists.


      Mar 13, 2010 at 12:55pm

      Insults aside, this is still a case of cyclists wanting a free ride when it comes to contributing to society. They don't pay for roads through licensing. They don't pay for insurance or take responsibility when they cause accidents. And many (not all) cyclists believe things like red lights, stop signs and turn signals don't apply to them.

      Everyone needs to pay their share in society...even cyclists.

      glen p robbins

      Mar 13, 2010 at 4:26pm

      Mr./Ms. So Lame makes a good point generally about the HST--however Charlie Smith's response is appropriate because it is true. The micro point about bicycles, HST and alternative transportation is well taken and I accept it as valid. These types of consumer taxes must always consider other policy initiatives. Whether you are Green or Conservative -- there is only a finite source of oil and gas---and we are dependent on this--so the alternative energy argument is valid--and we are in the midst of this--and bicycles are an alternative source of travel--you can't eat them--and they should not be considered a luxery item (which consumption taxes try to target)--so I believe an exemption from taxes ought to be available for bicycles.



      Mar 13, 2010 at 8:57pm

      Transitrider, you are dead wrong. You obviously don't understand how our tax system works, do you? Vehicle licensing does not pay for municipal roads; property taxes do. (If you question this, I'll provide two links at the end of this comment for you to check.) I pay property taxes in Vancouver, and I'm a cyclist. Those roads are mine, paid for by me just as much as any other property owner. Cyclists actually pay more than their fair share of inputs into the road system than drivers. In fact, relative to their use of the road system, cyclists subsidize drivers. Want to know why? Start with the second link. Here are those links. Read them, and pay attention.


      greg bly

      Mar 14, 2010 at 6:58pm

      5% on bikes not bad. Cutbacks on cycling infrasruture bad.I commute by bike and bus.
      G Bligh


      Mar 15, 2010 at 7:46pm

      Walking is even greener than cycling as a means of transportation, but shoes aren't tax-free. Most high-expenditure cyclists are recreational riders and we should not subsidize them any more than we already do. They haul their bikes off their SUV/car bike racks and zip around in flashy outfits on the weekend. Why is that any more virtuous than any other form of exercise?


      Mar 15, 2010 at 8:47pm

      Anyone who can afford bikes that run upwards of four or five or six thousand dollars can afford the taxes. Those bike lanes don't pay for themselves! Typical hypocrisy of the GS: demand more services and demand someone else pay for it, and above all blame Campbell. How about bike licenses and bike tolls? I have no problem paying for the services I use and paying the taxes that make this city and province function. I also take transit or, weather permitting for half the year, walk to work. Given the advertisements for NEW CARS the GS runs does anyone else want to call this article for what it is, or should we all just go buy new Cooper Minis, since Charlie takes their money and runs their ads?


      Mar 15, 2010 at 10:22pm

      I'm getting really sick of articles written as though the HST is already in place. You see, the people of BC are about to stand up and CRUSH the HST, as explained below.

      Just another reminder for you unregistered folks, if you don't like the HST, please register to vote by April 5th!!

      Elections BC approved an initiative proposal to cancel the implementation of the HST. The initiative campaign needs signatures from 10% of the registered voters in each of the 85 constituencies in the province within 90 days, starting April 6, 2010. In order to sign an initiative petition you must be a registered voter by no later than April 5.

      glen p robbins

      Mar 16, 2010 at 9:38am

      FR -- within the context of this 'debate' I don't believe that walking can be compared to cycling as an alternative. WildBill, from what I understand the average amount spent on a bike is much lower than the amount to ascribe to "anyone". Perhaps the exemption could include a limit to the amount of say $500.00. How about those regular bike shops that also sell used bikes?

      The rationale of alternative source of transportation is the most beneficial if one considers the moral suasian that accompanys this. My view is that any 'item' which can be directly related to fitness (aerobic/anaerobic), should not be taxed. Our health care dollars represent almost one half of all of our annual revenues--that is significant. Two well defined challenges for the health care system are (1) aging population increasing in size --higher incidence to health care use and when used by older people more money per 'demand'. Secondly, obesity is a problem. It's massive in the United States and apparently not much better in Canada and British Columbia.

      We should remove as many financial barriers we can to those products or services which promote better cardiovascular health and nutrition.

      I believe we need to put the dollars on the front end of this campaign--better education for young people--right from daycare--healthy nutrition.

      The type of 'investments' we make in people--who ultimately make or break the strength of (a nation--a province) is paramount and a healthy society will always out compete one that is not.

      The BC Liberal government under Gordon Campbell doesn't seem to have any continuity whatsoever with policy. After the 2010 Olympic love letter was sent sweet and perfect to all mankind about Vancouver and British Columbia (and Canada) spring coming--Lions and Whitecaps at Empire Stadium--Langley looking pristine and perfect for the Summer Games--I think we should be talking about how we make our province a culture of absolute fitness--mental and physical.

      The HST is simply a combined effort of federal and provincial government to assist big business--and to assist government. What is being avoided is the obvious--an additional tax on high income earners. The problem is that most higher income earners are involved in some type of big business. However the large business owners and higher up managers do not reflect but a minority of the population--it is clearly evident they have much more power and influence. This must be reduced--flattened like a pancake without raising corporate taxes.

      These used to be the musings of so-called socialists--but now they are practical conservative ideals imo.