WHY THE HST, WHY NOW?
By Premier Gordon Campbell
[And Bill Tieleman]
June 29, 2010
VICTORIA - July 1 is the first full day the Harmonized Sales Tax takes effect
Or if you prefer, is imposed without notice prior to the May 15, 2009 election, without consultation, without a vote and despite the overwhelming majority of British Columbians opposed
and I know that most British Columbians are concerned about what it will mean to them and for their family budget.
How about outraged?
I understand British Columbians from every region have expressed frustration and anger about how the HST was implemented.
Duh. Fight HST got a minimum 15% of all registered voters in every one of BC's 85 ridings to sign a citizens Initiative petition demanding elmination of the HST, with at least 11 ridings obtaining more signatures than your Liberal MLA got votes in the last election.
I know you have many questions for our government and for me personally.
Questions that should have been asked before the election.
Why did we say we were not considering an HST before the election?
Because we would have lost an election over the HST.
What made us change our position?
Because we had already lied about the size of the deficit - it wasn't $495 million - it was $2.8 billion!
Then we panicked - that's more than seat cushion money. So we called the federal Conservatives just three days after the election and begged them to give us the $1.6 billion HST "implementation" money.
Why are we bringing in the HST when much of the public opposes it?
Funny, that's what Blair Lekstrom asked me, before he quit the BC Liberal cabinet and caucus over the HST.
The answer is simple - because we don't care what the public think. If we did, we would have told them about the HST before the election.
We figure the public are too stupid and memory-challenged to remember the BC Liberals imposed the HST by the 2013 election.
How will the HST impact my family?
The average family will pay $521 more a year in new HST costs but many British Columbians will get hit far harder, according to the Statistics Canada study.
You deserve answers to all these questions.
But we're not going to give you them - that would be fatal!
Although you may not have seen much media coverage before last summer, combining the PST and GST to create a harmonized sales tax is something that has been discussed publicly for many years.
And soundly rejected each time by BC, including by my former Finance Minister Carole Taylor and my former Revenue Minister Rick Thorpe in the Legislature in 2008.
Federal governments - past and present - and business organizations - large and small across the province - repeatedly asked us to harmonize the PST with the GST because it eliminates unnecessary costs, reduces administration and is more transparent.
But not the public - who would get hosed by the biggest tax transfer in BC history, shifting $1.9 billion in HST costs onto consumers and off of my friends in big business. And those "unnecessary costs" simply getted downloaded onto the little guy who has to pay for it all.
Each time we were asked, we said we would not consider it for two primary reasons. First, it would eliminate B.C.'s ability to set our own tax rate.
And it still does - BC has given up its tax sovereignty to Ottawa for the most part.
Second, we wanted to be able to shape our tax regime with flexibility that would allow us to exempt certain goods and services from being taxable. It wasn't until last year that kind of flexibility was available.
As opposed to the Provincial Sales Tax, where we had complete and absolute flexibility to exempt any and all goods and services from provincial tax. That's why bicycles, restaurant food, vitamins and services like massage therapy, accounting, haircuts and much more were exempt.
Under the HST, BC can only exempt 5% of all taxable goods and services - so the extra 7% must now be applied to pay for shifting the tax onto consumers and subsidizing big business. Sorry suckers.
After the election, the Minister of Finance and I were informed that the Province's financial situation had deteriorated significantly.
Honestly, we never knew before that, even when noted economists like Helmut Pastrick of Central One Credit Union said our previous 2009 budget numbers were absurdly low. Ha-ha-ha-ha-ha.
I asked officials to find a way to meet our budget targets without cutting core services.
Because I've cut core services so many times before.
By late May 2009, it was becoming clear that after months of discussion Ontario had negotiated new flexibility within the HST model.
Actually, it was becoming clear far sooner than that, especially after Ontario announced it was imposing its own HST in March 2009!
Through further discussions with the federal government, we learned of additional flexibility that would allow provinces to set their own tax rate, instead of adopting a national rate of 13 per cent. This allowed us to set our own rate at 12 per cent, the lowest in the country.
Wow! Great news that we could now tax you an extra $1.9 billion a year on things that weren't taxed before - but at Canada's lowest HST rate!
And it will never go up - I swear - trust me!
We were also offered new flexibility that would allow us to exempt products we felt would be important to families - children-sized clothing and footwear, books, motor fuel, diapers, car seats and a range of other products.
In total, just 5% of all potentially HST-taxed products - everything else goes up.
Besides, I already put a carbon tax on gas and fuel - did I mention it goes up 1.1 cents a litre today also?
But enjoy those non-HST diapers - you may need them when you see how many things the HST does apply to! Ha-ha - just kidding.
In addition, the federal government offered $1.6 billion in transition funding. That meant we could reduce the future debt we would pass on to our children and support increased funding to both health care and education.
Even though you - the same taxpayer - will pay $1.9 billion this year and forever, we thought getting $1.6 billion in a one-time-only payment was well worth it! After all, we have good financial management skills.
With those new conditions in place, we asked ourselves if the HST would strengthen the Province's economy as we move through the global economic downturn.
It won't, as it reduces consumer spending and discourages buying goods and services at a higher rate, but we did ask.
Would the HST allow our industries and small businesses to better compete internationally and within Canada?
Not really - the USA and China don't have an HST, while Alberta has no provincial sales tax and Saskatchewan and Manitoba have rejected the HST.
Would it create jobs?
Not in the restaurant industry, which fears losing up to $750 million in sales and thousands of jobs due to the HST on food, or the new home building industry, which will be hit by significant taxes on homes over $525,000, or other service industries where they will have to charge clients an extra 7% tax for nothing.
Would it give business the ability to pay higher wages and lower prices?
Sure - unless they just decide to keep the money for themselves. Nah - that would never happen.
Study after study confirmed the HST would do all those things. World-renowned economist Jack Mintz from the University of Calgary found that moving to an HST will create more than 110,000 jobs, attract over $11 billion in new investment, increase wages and lower prices.
We were so sure that we didn't even bother to commission any studies before decided to impose the HST. We hired Jack - after he wrote the same report for Ontario - and he went all out, producing a 13-page study! 13 pages! It's exhaustive - and it's the only one we ordered.
And it came out months after we made our decision.
Don't worry that a Manitoba government study of the HST found that it would impose significant harm to consumers and the economy - or that Mintz previously wrote a report for Ontario that said the HST would cost that province 38,000 jobs!
Those working in small business, forestry, mining, energy, agriculture, retail, transportation and construction will realize immediate and direct benefits.
Unfortunately, not one union representing workers in those sectors believes a word we or their employers say about the HST - but the owners - outside most small businesses which will suffer - are very happy!
For the rest of us, the stronger economy will mean more job opportunities, stronger communities and more revenues to support critical public services.
Unless the HST hurts our fragile economic recovery and the opposite happens, or unless you work in one of the thousands of businesses negatively impacted by the HST and lose income or even your job.
The HST, combined with our other tax reductions, will soon make British Columbia one of the most attractive places to invest and do business anywhere in the world.
Unless you own a restaurant, a barber shop, a massage therapy clinic, a consulting firm, build new homes or vacation homes, working in the performing arts or sports - where ticket prices jump 7%, are a doctor with a 7% business rent increase, run a funeral home or are an investment counsellor - 7% more for consulting clients, or a realtor - 7% more tax on your fees charged clients, or work in the travel or airline industry - 7% more on domestic travel, or - well, I could go on and on but you get my point!
I know many people feel like they are paying more and getting less.
Because it's true!
That's why over the last nine years our government has acted to leave more of people's hard-earned wages in their pockets. We've cut income taxes by at least 37 per cent for individuals since 2001, and British Columbians now pay the lowest personal income taxes in the country if you earn less than $118,000.
But we've also increased a wide range of user fees to make up for it - like jacking your BC Medical Services Premiums by 50% - and reduced or eliminated coverage for physiotherapy, massage therapy and other treatments.
And we refuse to increase the minimum wage despite over 8 years without a raise for the poorest British Columbians.
The after-tax size of an average British Columbian's paycheque today is considerably higher than it was in 2001. An individual earning $50,000 a year pays $2,012 less in provincial income taxes today. That's more than $2,000 for individuals to save or spend as they choose.
Until the HST kicks in that is - I'm taking it all back!
Cutting taxes has helped our economy stay strong enough that we've been able to make record investments into health care and education.
And you'll have noticed that there are no waiting lists for surgery anymore, no overcrowded emergency rooms anywhere in the province and every school district in BC loves us because there are no school closures or layoffs for teachers or staff! We done good!
The HST has not been good short-term politics.
My party is now at 26% in the latest polls, believe me I know! We are cooked!
But in the end, everyone has to decide whether they are going to do what is right or what is easy.
For me, giving a $1.9 billion to big business as my parting gift as I head out the door and leave the BC Liberal Party in ruins is quite easy - and expressing their gratitude to me afterwards is the right thing for them to do!
I believe the HST is the right thing for our Province's economy and for our children's future.
No one else does, but I do - and I'm still the Premier for a few more months. If they don't like it, your kids can move to Alberta or Washington state.
Change today will make us stronger tomorrow.
But not the kind of change that comes from the Fight HST Initiative or especially Recall!
Please don't Recall enough BC Liberal MLAs to force me to rescind the HST!
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- Jeff Kubina photo
