BC is the place to be for political junkies in 2011. Even with the Liberal leadership race over and Premier-designate Christy Clark at the helm, we’re still looking at a provincial NDP leadership vote on April 17, a potential provincial election, municipal elections later this year, and even the possibility of a federal election – all this and an HST Referendum too. I’ll continue to watch the other events unfold with interest, but right now I’m most concerned about the last one, and other British Columbians should be too.
The provincial government is holding a referendum on the HST in September 2011, although Clark has indicated she would prefer an earlier vote in June. But research conducted for the provincial HST Information Office indicates that many British Columbians are unclear about what the HST applies to and how the tax will benefit BC’s economy – and their own interests – in the long run.
For example, some people think we are paying HST on food staples (as one HST forum participant put it: “Basically, if you open your mouth and eat anything other than grass, you are paying for it”). But this isn’t true. Taxes on basic groceries haven’t changed – they weren’t taxed under the previous system and they aren’t taxed now.
In fact, many people may not realize that the taxes on most of the goods they purchase haven’t changed. We paid a combined tax of 12 percent on everything from dish soap and DVDs to clothing and major appliances, and we still pay that under the HST. The only difference is that the HST appears alone on our receipts, without a convenient “before-and-after” comparison with the previous GST and PST.
Luckily, information about how the HST has actually affected British Columbians since its July 1, 2010, implementation date is beginning to roll in. Jonathan Kesselman, Canada Research Chair in Public Finance at SFU, published a paper in February 2011 that analyses available data on the HST for the first six months and presents a figure that should reassure many: the HST resulted in just a 0.6 of one percent increase in overall consumer prices in BC. As Professor Kesselman calculates, that translates to about one additional dollar for every $165 spent by the average consumer.
Statistics like that should help British Columbians decide how to vote in the HST Referendum. But more support is coming. We’ve also got an Independent Panel – government appointed, but made up of non-partisan experts – working now to analyse and identify all the pros and cons of keeping the HST or returning to the old PST/GST system, including what the financial implications are for unwinding the HST.
Most British Columbians want these facts. To paint the Referendum – or the HST itself – as something that pits businesses against consumers is unhelpful and misses the point. As British Columbians, we all benefit when BC’s economy is strong and growing.
It’s not an exaggeration to call this Referendum one of the most important choices that British Columbians of this generation can make, so we better make the right one. Non-government economists who have already weighed into the HST debate have projected that the HST could generate up to $14 billion in new investments and well over 100,000 jobs in BC over the next 10 years. No other single decision that we can make can touch those figures for BC. But, make no mistake: this decision will also affect all of us personally and individually.
Take me for example. I support the HST as head of the BC Trucking Association because, among other reasons, it benefits motor carriers in terms of the input tax credits they receive on their investments in new equipment and the additional savings that new equipment often represents in terms of fuel efficiency and reduced maintenance costs.
But, in a few months I am leaving my employer and will be thinking more about the HST as an individual consumer. Yes, my haircut and restaurant meal will cost me a little more, and I’m not eligible for HST credits in any form, but the HST will contribute to a vibrant economy that will support provincial healthcare, education and a multitude of other programs that make BC a great place to live. As a father and grandfather, I will see my family enjoy the long-term benefits of this tax, which is well positioned to do some heavy lifting for BC’s economy and financial future.
Professor Kesselman’s paper is available at the Business Council of BC website, www.bcbc.com. The Independent Panel’s report will be publicly available in April. If you haven’t made your own decision about the HST, take time to consider all the facts.
By Paul Landry, President & CEO BC Trucking Assoc.