The people have spoken - the Harmonized Sales Tax is sunk.
It no longer matters whether B.C.'s population scrapped the HST because it took too much out of their wallets or as punishment for the seemingly devious way it was introduced - all that remains is how will B.C. leaders make the will of the people work?
It's hard to forget how Liberal Party brass kept referring to the GST/PST system as "broken." So making the PST work now risks making them look like they were just trying to fabricate hysteria to achieve their own agenda.
But only a deeply dysfunctional government would sabotage its own economy just to make a point. And if there's one thing British Columbians can count on, it's that its politicians have the sincerest desires for prosperity.
But they've got some hefty challenges ahead of them. It's expected to cost $30 million to re-instate the infrastructure to collect taxes under a reinstated PST/GST system - and that's just part of the costs. Then there's the $1.6 billion elephant in the room - and Stephen Harper made no delay in saying the feds expect repayment of the HST transitional assistance funds.
So what measures will the province take to weather the fiscal storm?
First, mystery is not good for the economy. Investors don't like instability, and an introduction then repeal of a controversial tax under circumstances that significantly hurts government support can definitely be called instability.
Investors also avoid the unknown - and in such turbulent times, industry leaders wouldn't be blamed for looking elsewhere to set up shop. So clearing the air on the next move can go a long way to mitigating loss of investment.
To its credit, immediately following the referendum results, the province issued a lengthy and detailed explanation on exactly what tax system would replace the HST (the PST/GST model), how long that's expected to take (18 months), and the steps to transition.
One critical piece to contend with is the potential of a sloppy bureaucracy leading to complaints over incomplete, inaccurate, unclear and untimely information as well as unfair treatment, or untimely taxation appeals and dispute resolution.
It seems the province anticipated demands from the likes of The Canadian Federation of Independent Business to help small business owners in the transition, saying the government will provide them with training on new tax application, collection, compliance and reporting rules related to the PST.
However will the province honour its promise to roll back the small business tax to zero in 2012, as was the case when the premier introduced a reformed 10 per cent HST?
B.C. is also facing a revenue shortfall that threatens to undermine its intricate system of social safety nets.
Clark's campaign promise of "families first" suggests a dependable social structure that wouldn't leave underprivileged citizens out in the cold. It remains to be seen what innovative methods, outside of taxation, the government will take to turning campaign promises into reality.
The government may pull off a miraculous swing in economic tides, but with an 18-month window ahead of them, it feels like there's a long way to go before economic stability returns to B.C.
-- Prince George Citizen
