Our HST Heroes
Here they are on the big day! On July 23rd, 2009, Premier Gordon Campbell and Deputy Premier and Finance Minister Colin Hansen decided to save the British Columbian economy and ease unemployment in one fell swoop. In fact, this announcement had such a pronounced effect, that unemployment eased the very next week (see cbc.ca article here). Great job! That last bit is almost too good to be true.
This harmonization is going to put $1.9b into the government’s pocket and ease any concerns about deficit due to a recession. It’s just great. Where on earth does the praise end?
Oh, I think it ends right about…. here. ”B.C. revolt against harmonized sales tax growing.” That’s the headline. Why would there be revolt if we all have jobs and have all of this extra money in the bank?
This tax is the biggest affront to the “little guy” that we’ve seen since the GST implementation. Let’s start with small business. Steve Tannock puts in a very simple analysis on his own blog. In short, his business-to-consumer business just became more expensive. If you work in web development or marketing, or any other business where your margins are modular, you’ve probably just sold less modules. If you work in restaurants – well, they are speaking up just fine.
The “medium-sized little guy” has his challenges, too. If you want to buy a home or condo over $400,000 – you are going to be eating a huge tax bill on the order of $48,000. We can all watch our prices rise in May-June 2010 as people try to squeeze in under the deadline. Then we can watch the market fade next summer when people are hesitant to make a move. I’m not a real estate person, but these guys, Kye Grace and Tom Everitt, are and they have a fair bit to say in the opening segment of their video:
Let’s look at the “littler little guy.” Families must be absolutely relieved that kids’ clothes and basic groceries are still exempt and will follow the same basic rules as PST. According to this StatsCan report (c. 2008), you can say that a family with a single parent and two children is at the poverty line somewhere between $25,000 and $33,000 depending on location and specific circumstance. That’s a fairly large gap, but the bigger the gap, the more difficult it’ll be to take flack on my position. I’d surmise that, for a family of 3, if you make less than $33,000 gross income in British Columbia, you spend most of that to survive. In order to alleviate hunger, it’s much easier for those with stretched incomes to chase the cheaper food which means most of the more expensive, whole foods are off the menu and are replaced with processed or fast foods. Just by scratching the surface, the Liberal Government of British Columbia has made it that much more difficult to be part of the working poor in this province. Single parents making $8/hr (~$16k/year for 2000 hours worked) will be behind a bigger 8-ball than they are already.
This tax puts $1.9B into government coffers by preying upon British Columbia’s most vulnerable. Gordon Campbell has just put BC’s poorest citizens last in line to recover from the recession.
I’d like to qualify my point of view. I’ve lived in Point Grey and voted for Premier Campbell. I’ve lived in New Westminster and voted Liberal against overwhelming odds in an NDP-dominated riding. I like to personally think that Campbell’s first term in office created as many waves because of poor change management for all stakeholders of government services as for the changes he brought into affect. I don’t agree with the implementation of the HST.
It has its pros. It will save capital-intensive industries in BC a fair bit of cash and it’ll help exports. Most of these industries, such as forestry, are fading on their own accord and it remains to be seen how exports will fair in an environment that features higher transport-energy costs. The PST is a pain to administer in your own small business. I’ve done this and it’s terrible – the GST, soon-to-be-HST, is much easier to manage.
Lindsay Meredith, an SFU professor specializing in consumer behaviour says that “Whenever you see anything introduced by a government while the house is not sitting and there’s no consultation, get worried. This is something that probably deserves a little discussion in the house, and that hasn’t happened.” He believes this is a regressive tax and any opposition has to occur now, because once a new tax is implemented, it’s not likely to go away.
And why now? Steve Tannock touched on this briefly, but apparently if Colin Hansen had been up on the Ontario budget back when it was announced in March, the HST would have been an election issue. Really? Apparently the Liberal government wasn’t tipped off to the groundbreaking news made public in March. If you don’t take him at his word, we’re looking at a bad tax and bad politics. That can only bode well.
One thing I don’t understand is how it will affect health care. For example, if a BC Health Authority must pay HST to its vendors, does it receive a break on its budget? Or did all of our government services that pay external vendors become that much more expensive to maintain?
For more, check out the recent article at straight.com as well. If you’re so inclined, check out the No HST Facebook page, but most of all, contact your MLA and make this Legislature earn those hefty pay increases.