Last Thursday was a significant day in British Columbia's history.
For the most part, it felt like any other Thursday. It was rainy but warm. Flowers were blooming. The grass was turning green. Spring was showing all around us. The physical world did not note the matters of importance occurring in Victoria.
But, just before 6:00 pm, Bill 9 - Consumption Tax Rebate and Transition Act was proclaimed by the Lieutenant-Governor as law with only 56 of the 213 clauses having been debated.
Like it or not, as of July 1st, we will have an HST. Actually, before July 1st for many goods and services such as annual memberships at the local gym or the summer vacation trip that you might be planning to take.
The new tax has already come into effect in these cases.
The Bill is a mess of legal language but in essence, it harmonizes the provincial sales tax with the federal GST and hands over the power of provincial taxation to the federal government.
It also shifts the tax burden carried by the various components of the provincial economy in a profound and probably irreversible fashion. I say "probably" because, as we have seen with the GST, once such a tax is in place, it is too golden of a goose to undo. Or should I say "too fat a cow to not milk". Actually, there are a lot of sayings that could apply but generally speaking, undoing such taxes is not something that a government can or wants to do.
But even a former member of Gordon Campbell's cabinet - former Finance Minister Carole Taylor - recognizes the HST for what it is. Ms. Taylor said: "This particular tax takes the tax off businesses - it takes $1.8 billion off of businesses - and puts it on consumers."
She added: "But I think the bigger issue is that [Premier Gordon Campbell] promised that they would not - they would not - do the harmonization of the sales tax. And then right after the election, decided to do it."
"There is a feeling of having been deceived by the government that people elected."
A tax shift from business to you and me. Simply put, that is what the HST is. And undoing it means that any future government would have to shift that burden back onto business. Not likely to happen.
In a world where capital moves around the world with relative ease, and the free market is god, any future government will be hamstrung in trying to re-balance the tax burden.
Have no fear, though. Jock Finlayson of the B.C. Business Council and others who support the government have argued that the HST will create a tax shift that will save businesses $2 billion through tax credits that they can now take under the HST model.
They go on to argue that those savings will then be passed on to consumers through lower costs. Where have I heard that argument before?
Hmmm.... when the GST was introduced. But, of course, it didn't happen.
Why not? Consider the following from Mr. Finlayson: "It's true that some services that have been previously exempt are going to face the HST. The tax burden on those will go up, but the cost of producing will go down."
The cost of producing will go down.
Contrast this statement to the comments of Minister Bell in his arguments in support of the HST at a local debate last month where he pointed out that we are "an export economy". He noted, for example, that if we were a "closed economy" - servicing just ourselves - that we would need only one sawmill in the entire province.
That is, we don't produce for our own consumption. We produce for export.
Simply put, the HST will make it cheaper for people in other parts of the world to buy and consume goods produced in British Columbia but do nothing about the production costs of those goods which we buy from other jurisdictions.
Actually, the HST will make it more expensive for us to buy those goods because they will all be subjected to HST - both at the point of purchase and along the import chain as each service will now apply another layer of taxation.
I have said it before and I will say it again, the HST is the wrong tax implemented in the wrong way at the wrong time for the wrong reasons.
And, if the referendum campaign is anything by which to judge, I am not the only person that feels that way.
