The implementation of HST is the greatest public policy failure in the history of B.C., regardless of the referendum results. Political science, economics, public policy, and tax law classes should be required to use B.C.’s HST implementation as a case study of what not to do when bringing in new policy, especially tax policy.
There are no good choices in the HST referendum
A Yes vote to extinguish the HST and return to the GST and PST means a costly transition, the least of which is the need to repay some or all of the $1.6 billion owed to the federal government. Even more expensive, to say nothing of the practical difficulties, is re-creating the provincial sales tax office; transitioning staff back from the federal tax collector; and reestablishing systems for PST collection. Businesses will be inconvenienced as they change to the dual tax collecting and tax submission schedules. Large businesses may be able to cope; small businesses will find it extremely difficult and pricey.
While some romanticize that the PST is a better tax, it isn’t. A look at PST exemptions suggests questionable logic was used for what got taxed and what didn’t. Some exemptions simply rewarded special interest groups that appeared to have the ear of the finance minister of the day.
A No vote to keep the HST is also costly. The government plans to reduce the provincial portion of the HST to five percent over two years, a tax revenue loss of $800 million for each percentage point. In addition, taxpayers will bear the expense of a one-time payment to be made for every child under 18 and to low-income seniors. None of us begrudge helping seniors. The payment for children, like all universal plans, gives the money to those who need it and those who don’t, with far more in the latter category. As well, others like those in poverty and people with disabilities for whom the HST is a burden receive no compensation.
Direct payments are never good tax policy. They hold the distasteful perception of trying to buy votes.
The HST was badly planned and implemented. Deciding to change it haphazardly does not address the fundamental problems nor does it improve the tax.
The Green party supports taking taxes off income, investment, and job creation—and putting them onto waste, pollution, junk food, and carbon emissions. We believe the tax system should be used to reward businesses and individuals that implement low carbon, energy saving, and wellness creating practices and penalize those that don’t. HST has some of the aspects of that kind of tax policy. However, it fails to achieve the beneficial objectives because it is not connected to a strategic plan.
Is there a right choice?
It seems that the B.C. Liberals and their supporters all support HST and will vote No to keep it—misrepresenting this as “say No to higher taxes”.
On the other side, the B.C. NDP and their supporters are universally opposed to the HST and want to return to the PST. They tell people to vote Yes.
At our recent AGM, B.C. Greens debated a resolution asking the party to take a position supporting a Yes vote. The resolution failed. Three-quarters voted against it. Reasons expressed by the majority included a preference for value added taxes and a simpler tax system; getting rid of the hidden tax costs that are inherent in PST; that rich people pay a higher portion of the tax because they buy more; and that people with wealth can’t avoid the tax. Those who oppose HST expressed concern that it unfairly shifted the tax burden from industry to consumers and that poorer British Columbians pay a higher proportion of their income in HST than do wealthier people.
In contrast to the demand for unanimity made by other parties, B.C. Greens trust that voters will vote in the way that they think is in the best interests of B.C.. Some will vote Yes and some will vote No.
I am going to vote No. I believe HST is better than a return to PST. For me, it is the least bad alternative.
Jane Sterk is the leader of the Green Party of B.C.