Tuesday, June 22, 2010

BC Liberals asking the wrong HST question because they want you to give the wrong answer

Bill Vander Zalm, 2nd from left, watching Bill Tieleman speak at Fight HST rally September 19, 2009 in Vancouver

Wrong HST Question, Premier Campbell

He asks how we can afford to drop the hated tax, so he can give the wrong answer.

Bill Tieleman's 24 hours/The Tyee column

Tuesday June 22, 2010

Bill Tieleman

"We must make some difficult choices. Do we increase income taxes, increase the provincial sales tax, or cut programs and services?"

- Ex-B.C. Liberal MLA
Blair Lekstrom, after quitting over the HST

B.C. Liberal MLAs are asking you the wrong question about the 12 per cent Harmonized Sales Tax to be imposed July 1 -- because they want you to give the wrong answer.

The real question on killing the HST isn't about cutting services or raising the provincial sales tax

The real HST question Premier Gordon Campbell fears is this: "Do you want to personally pay hundreds or even thousands of dollars in new taxes every year to subsidize big business?"

It's that simple.

And it's why the Fight HST citizens Initiative petition campaign has gathered nearly 700,000 signatures in less than 90 days -- because the answer is clear: NO!

All hell won't break loose

But Campbell wants voters to answer a very different and highly misleading question, because he wants you to give the wrong answer and begrudgingly accept the HST.

Don't be fooled.

Campbell wants you to worry that if B.C. rejects the HST and returns the $1.6 billion one-time-only grant from the federal Conservative government to "implement" the tax, all hell will break loose.

Hospital cuts, school cuts, public services slashed and taxes will have to go up, too, they want you to believe. What a disaster. We'd better keep the HST!

What garbage.

The reality is that this B.C. Liberal government is spending many times that $1.6 billion on several projects that won't even benefit most British Columbians and will be paid for over many years.

The new Port Mann Bridge alone is going to cost $3.3 billion -- double the federal HST bribe money.

The Canada Line rapid transit project cost

$2 billion, the Golden Ears Bridge, $800 million, the Trade and Convention Centre, $883 million -- including a $388 million cost overrun -- and B.C. Place's new roof will run a minimum $458 million.

And then there's a little item called the Vancouver 2010 Winter Olympics -- with a price tag B.C.'s auditor general
estimated at a minimum of $2.5 billion and that some critics say cost $6 billion or more.

And for non-Metro Vancouver residents -- did you happen to notice that none of the B.C. Liberals favourite big ticket items are coming to your town? But you will get to enjoy the HST every day.

A very small bribe

To put the $1.6 billion HST grant amount in perspective, it is just one per cent of British Columbia's total budget expenditures over four years – and only four per cent of one year's roughly $40 billion budget.

It's an amount that can be dealt with sensibly over the budget cycle in a number of ways without cutting needed services.

And by eliminating the HST, B.C.'s recovering economy wouldn't be hurt by the negative effects of the extra seven per cent tax on so many consumer goods and services,
meaning higher government revenues are likely.

But keeping the HST means the ongoing transfer of taxes onto consumers from big business amounts to $1.9 billion each and every year -- over four years ordinary British Columbians will have to fork out an extra $7.6 billion from their own pockets in extra HST costs.

And while paying 7 per cent more for restaurant food, domestic airline tickets, haircuts, home repairs, basic cable, realtor fees and hundreds of other items, they won't get one thin dime more from the HST for new healthcare, education or public services.

Perhaps the only thing we will get is the sincere thanks of large corporations whose costs will drop by $1.9 billion.

Pass on the savings? Not likely

But if you think they will reduce prices on consumer goods you purchase by an equivalent amount to balance that, think again.

B.C. companies don't make many of the products we consume here -- so even if they did reduce their prices, it wouldn't balance the increased costs of the HST.

Think about the really large corporations who will benefit -- Alcan, Canfor or Teck Cominco, for example, and then ask yourself -- how many rolls of aluminum foil, two by fours or coal and copper will you use this year?

Even if those companies reduce their prices thanks to the HST -- a very big "if" indeed -- how will individual British Columbians possibly benefit when the products they purchase aren't made here?

The HST supporters also argue that by reducing business costs through shifting the tax burden to consumers, the overall economy will improve, jobs will be created and more money spent in B.C. -- the
trickledown theory in other words.

This is about democracy

Even assuming -- again a huge risk -- that this is actually true, did you get a vote on whether or not to personally finance this enormous corporate subsidy expenditure?

Errr, no.

In fact, the B.C. Liberals in the 2009 election expressly rejected the idea they would introduce the HST when pressed by both the
restaurant and home building industry associations.

And previous B.C. Liberal cabinet ministers like
Carole Taylor and Rick Thorpe even warned about the negative effects an HST would have on the economy.

So remember the facts when a glad-handing premier and his MLAs make the rounds this summer trying to convince you that paying $1.9 billion every year in new HST costs for the rest of your life is worth getting $1.6 billion just once.



Ron said...

A great review of the issue, Bill.

Only God knows how much of our taxpayer's money the Fiberals will spend this summer to convince us that higher, regressive taxation - and a massive download of corporate taxes onto individuals - is good for us!

Dan said...

The real questions are, if we had neither the HST or the PST and wanted to introduce a provincial sales tax to raise revenues would a provincial government be better off:

1) Relying on the federal government for a single collection agency to reduce paperwork for businesses and administration costs for the province or would the government be better off duplicating everyone's workload.

2) Having a tax that applied only to the final sale no matter where the components were manufactured or creating a tax that would cost more to purchase goods manufactured in the province than elsewhere as every time the components changed hands in the province the tax would compound.

3) Have tax that hindered subsidiary companies or small businesses from becoming part of the supply change by making it more efficient for big companies to do everything in house (and often across borders) to avoid transactions that would result in a tax.

HST/VAT would win over PST any day of the week.

The question then is should the BC Government have kept all the existing exemptions and made up for the lost revenue from compounded taxes elsewhere (income, resources, increased sales tax) or did they do the right thing by REDUCING SUBSIDIES to movie theatres, investment consultants and lawyers, golf courses, and steak houses.

Before we were subsidizing the Keg, now we are treating all business activities evenly.

Yes, some exemptions should be restored (children's camps, bikes, energy retrofits) but that isn't the conversation and certainly, stupid infrastructure projects with no ROI should not go through, but those are two separate issues.

Also Bill, you have arguments based on faulty premises.

Alcan, Canfor or Teck Cominco will have very little of their tax based reduced because they export the end product and neither PST/HST wasn't charged on exports. The only rebated they will be getting is taxable sales to BC companies-taxable costs from contractors or suppliers. Alcan makes its own power, so they won't even be saving much on energy.

In fact, now there is a greater incentive for them to export less raw wood or materials and allow more domestic companies to spring up to do processing. The current PST regime makes it cheaper to ship goods cheaper to China tax free, get them processed there and ship to BC to save on the cascading tax.

Anonymous said...

Great write up Bill.

What Campbell doesn't seem to realize is, that the more the Liberals push the HST, the more likely the underground economy will increase. That means more and more business will get done "under the table" and the taxes that would otherwise be paid - HST and Income Tax, will be lost forever. Once the momentum picks up those taxes will be lost - never to be regained.



Anonymous said...

Not a bad summary, but more of the same old "name of project cost xx dollars?" A bit worn out there.

The M-Line cost $1.2 billion, the HOV project on the Trans-Canada about $65 million (which turned out to be ineffective because Lali didn't figure to make the Port Mann HOV lane reversible and could have spent an extra $10 million to do so to actually complete the project). Then there was the Inland Island Highway which was union wage paid out and was over designed north of Courtenay.

Won't even go into the FastCats which were a disaster. Our party admitted neglected BC Ferries and should have started a program to build steel hulled ferries, not aluminum.

But to be fair the Convention Centre is returning revenue and the cost over runs were the cause of a spiking of costs of materials, not design changes or labour.

The Canada Line has been a bit of a success story.

The Golden Ears Bridge was Translink, not the provincial government (Ministry of Transportation), and admittedly it was the NDP that brought the monstrosity Translink out in the first place.

But aside from all that, a good write on the HST.

Keep at it.

Anonymous said...

With regards to 8:13, may I suggest a PAB rat traffic tax?

Or Warfarin. One or the other.

John Twigg said...

Well done as usual but you could have added this point: ... regarding alcohol prices - the taxes will go down but the government has decided to raise the mark-ups so that consumers will see no difference.

What hypocrites eh? They say businesses will pass on their savings to customers and yet the government in its own business pockets all of the savings for itself.

Anonymous said...

"Or Warfarin. One or the other."

Let us know how it works out for you.

Second Ron said...

Bill, You are wrong on the Canada Line costing the taxpayer $2 Billion the dollars, the real cost to the taxpayers is $7 BILLION!! The $2B is just the cost of billing the line, the carrying cost to the taxpayer is significantly higher on these P3P project simply because the private company can not get the preferred interest rate that the Government can get, think 12% verse 3%.

To ignore the extra 9% interest charges over the 40 years of these P3P contract is let these poor managers off the hook way too easily.

DPL said...

Hansen in Letter to Editor today Times Colonist.
Don't forget the savings through reduced taxes

Re: "Annual HST hit for average B.C. household is $521," June 22.

The article analyzed the impact of the harmonized sales tax on B.C. families.

When undertaking any analysis, the results will vary depending on the data and assumptions used. For example, a study released Monday by the Fraser Institute showed that most low- and middle-income British Columbians will be better off under the HST.

It is worth noting that the Statistics Canada model did not mention that the tax cuts implemented by this government since 2001 have resulted in annual savings of between $800 and more than $2,000 for those same families.

One thing all economists seem to agree on: Moving to the HST will result in increased investment, job creation and economic growth in our province, which is the best way to support B.C. families. Simply put, the HST is good for B.C.

Colin Hansen

Minister of Finance and Deputy Premier
I wonder who writes his letters.

Anonymous said...

Tax the Rich
they don't mind

As Ezra Klein’s research desk explains, most studies show that rich people don’t flee higher-tax states for lower-tax ones and “the revenue generated by state tax increases on high earners overwhelms that lost from taxpayers’ leaving.”

In fact, raising taxes on the highest-income households — a group that’s enjoyed the greatest rise in incomes and the greatest decline in taxes in recent decades — is a sensible and effective way for states to help offset the huge drop in revenues during the recession.

by Jon Shure, Center on Budget and Policy Priorities

Anonymous said...

The Vancouver Sun - StatsCan report on new tax’s effects is highly credible, economists say, by Carla Wilson

A Statistics Canada report on the effects of the HST is highly credible and much more transparent than a rival analysis by a right-wing think thank, economists said Tuesday.


Iglika Ivanova, an economist with the Canadian Centre for Policy Alternatives, said the StatsCan model is the one “governments use to run their own calculations when they are proposing new taxes. This is the state of the art.”


“Sorting out exactly what is going on in the Fraser Institute model is very difficult,” he [Herbert Schuetze, an economics professor at the University of Victoria] said, calling the methodology “cryptic.”

It appears to be done using more aggregate data while the Statistics Canada study “seems to be more micro-based.”

Anonymous said...

Harvey Enchin, at The Vancouver Sun, has a different take on the various economic studies that would attempt to measure the impacts of the HST.

Anonymous said...

David Schreck states Fraser Institute study doesn't pass basic math test

In an 11 page "study" the Fraser Institute claimed that the total tax bill of the average BC family will increase by only $44 under the HST, consisting of the difference between an average increase of $249 for the HST and an average income tax reduction of $205. Everyone agrees that the HST will shift $1.9 billion in taxes from businesses to families, so dividing $1.9 billion by $249 means that BC would have to have 7.63 million families. The population of BC is only 4.5 million so something doesn't balance in the Fraser Institute's study.


BC Liberal Finance Minister Colin Hansen has set his sights on a new target: Vancouver Province columnist Michael Smyth The Vancouver Sun's Jonathan Fowlie blogs.

In separate interviews with at least four reporters this week, Hansen has called out Smyth by name for things he has been saying on radio station CKNW.

“He [Smyth] would go on his typical rant: 'and they promised there would be no HST,' ” Hansen told me earlier this week, impersonating Smyth's radio personae.

“'And three days later they started negotiating,'” he continued in Smyth's voice.

“That is absolutely factually incorrect and I think he knows it and I don't think he cares,” Hansen said.

[voice of Inigo Montoya] Hansen, you keep using that word "FACT". I do not think it means what you think it means. [/voice of Inigo Montoya]

Anonymous said...

I keep hearing from the BC Liberals that they're not introducing legislation that enables the HST, all that they're doing is abolishing the PST. In other words the BC Liberals are not introducing a new tax, its the Feds, and if you want to change the implementation of the HST, they say write to your MP in Ottawa.

Well, I have here, a history lesson from 2004, BC Hansard, and its MLA Joy MacPhail doing the talking:

"*Point of Privilege*

* J. MacPhail: *Mr. Speaker, you will recall that yesterday I rose and reserved the right to raise three matters of privilege. I would like to address the first one now.

* Mr. Speaker: *Please proceed.

* J. MacPhail:* I would like to present to you what I believe to be a prima facie case for the argument that the Minister of Finance has acted in contempt of this Legislature and its primacy by violating the fundamental principle that a tax cannot be increased or implemented before it has been presented to the House.

I would like to first refer you to a press release dated December 19, 2003, that was issued by the Minister of Finance. It is titled "Province Increases Tobacco Tax". Within this news release the Minister of Finance announced that the tax would increase by 1.9 cents per cigarette. The increase went into effect at midnight that evening, and to date this government has collected about $6 million in that tax — that new tax.

I want to make it clear that I am not raising issue with the merit of the tax or the increase, so the heckling of other members can stop on that issue. Instead, I would argue that the minister…


* Mr. Speaker: *Order, please. Order.

* J. MacPhail:* …violated the primacy of this House by unilaterally enacting such a change without legislative authority. The tax increase was simply announced. There was no legislation, no cabinet order, no motion to the Public Accounts Committee. The minister acted without any authority.

For your consideration, I would refer you to the Tobacco Tax Act itself, an act that establishes that this is a tax. Section 2 of the statute clearly sets out the tax rate for cigarettes and tobacco. The rate of tax is not set by regulation. It exists as law in the Tobacco Tax Act.

To date, the Minister of Finance has not brought this change before the House. Indeed, yesterday he didn't do it. Today he didn't do it, and he's collecting millions of dollars. He has changed a statute without support from the Legislature."

February 11, 2004

Source: http://www.leg.bc.ca/hansard/37th5th/h40211p.htm

The BC Liberals, without enacting any legislation are about to receive Billions of tax dollars from those that can least afford it. In under a month they are about to unleash a barrage of advertising using OUR tax dollars to explaining HST will be good for us, and the province, but how can they do this without putting in writing, before the House to explain to our MLAs, and theirs, just what this new tax is all about. How can they justify the spending of crucial dollars when they've promised to cut back on those kinds of wasteful use of tax dollars?

How can the BC Liberals even consider going down the path of spending more tax dollars to support a lost cause, that is the possibility of the resurrection of the BC Liberal Party after their dastardly trick of promising not to have an HST before and during the last provincial election.

Where's the legislative authority Mr. Campbell?

Anonymous said...

"Well, I have here, a history lesson from 2004, BC Hansard, and its MLA Joy MacPhail doing the talking"

She did do alot of that, even when the NDP raised taxes when they said they wouldn't.

But there are fans of Bill VanderZalm that have come back, might as well bring back the fans of Joy McFailure to balance things out.

Legislative Authourity? Where does that come from? The same place the NDP got theirs when they were in government.

"Governments can do what ever they want"

- David Zirhelt, NDP MLA.

But the anti-HST petition is a success. Cheer about that. We did it!

Forget the over and over again commentary written into hobby blogs such as this one after July

Just going to be more of the same commentary from those who didn't bother to help us out in last year's provincial election to defeat the NDP. Same people who squish their behinds in a chair and finger a keyboard rather than
getting into actually helping our party build to the next election.

Time to enjoy a nice British Columbia summer and give politcs another go after Labour Day.

Enjoy the summer

Anonymous said...

Campbell's NEW new spin...

There were three reasons that this really made sense at the time. The first was we actually saved $1.6-billion in debt that we didn’t have to load up on the next generation of British Columbians. Second, it provided us with some interim funding to help support the health and education expansions we were planning. Third, it created a far preferable investment climate.

The Globe and Mail's Patrick Brethour fails to ask if all the tax breaks to business and the rich have paid for themselves during the last nine years of record BC deficits.

Anonymous said...

I wonder if the spin doctors who dreamed up that line for Campbell to say realize that not only are we provincial taxpayers, but also federal taxpayers as well.

Yeah, sure, we'll get the $1.6 billion from the Conservative government, but the monies are coming out of our pockets no matter where its coming from.

Anonymous said...

"Yeah, sure, we'll get the $1.6 billion from the Conservative government, but the monies are coming out of our pockets no matter where its coming from."

Certianly getting alot more from the Conservatives than BC ever did from those federal Liberals.

Anonymous said...

The financial mess in this province, is due to Campbell and his stupidity. His hair brained idea, of putting hospital administration in regions, is a disaster. There had to be a multitude of buildings bought, more maintenance staff, more administration staff, more administration assistance staffers. It required three times the cost, that it was before. It was a chaotic God awful mess. You can't run a hospital as a business. There isn't one thing he has done, that he hasn't screwed up. The only thing he is meticulous about, is making sure, he gave himself a 53% salary hike, a $2 million per year pension. And his henchmen 29% raise. He has stolen every dime he could. The BC Rail and such.