Hi. I know it’s been a while since I wrote something, especially of substance. So here I am getting back into the swing of things with my latest article. Hope you like it.
If you’ve lived in BC this past year and a half, you may have known for a long time about the most heated three letters in the province: HST. The tax came from nowhere, became part of BC faster than you think and is now up for public vote after a year of existence. The tax and the craziness surrounding it is both frustrating for the citizen and cartoonish in the media’s eye. Even more surprising is that the referendum involving the HST isn’t your typical ballot-and-booth referendum but a mail-in referendum lasting a full month. Most BC residents may not know a whole lot about this Harmonized Sales Tax but it sure has been far from harmonious in BC.
What few people know is that British Columbia is currently one of five provinces with an HST. The others being New Brunswick, Newfoundland and Labrador, Nova Scotia and Ontario. Actually it was the Atlantic Provinces who worked back in 1996 in having a Harmonized Sales Tax implemented in order to lower the amount of tax a citizen would have to pay. This resulted in a 15% HST that came into existence on April 1, 1997. When the GST lowered to 6%, the HST went down 1% to 14% and would go down to 13% when the GST was reduced to 5%. It was noticed that the price of goods fell when the HST came in. In fact one of the things in changing from a cascading tax to a value-add tax was to reduce income taxes, and instituted direct transfer payments (refundable tax credits) to lower-income groups, resulting in lower tax burdens on the poor.
The benefits of the HST were appealing. Even Prime Minister Stephen Harper government said of tax harmonization: the single most important step provinces with retail sales taxes could take to improve the competitiveness of Canadian businesses.” However it was in 2010 when the HST was implemented in BC and Ontario that the drawbacks came to light. It made businesses hard to manage and property values hard to maintain. Many food expenses which had either to the one tax or neither tax became more expensive. The price of gas increased. Services like haircutting and dry cleaning which had only one tax saw the raised price. Some items in BC, like public transportation, ferry costs and toll-bridge tolls. Children’s clothing, child-care items and feminine hygiene items were also exempt. Nevertheless the expenses that were already added were noticed soon enough.
In BC, the brouhaha about this tax is not just simply its existence but its introduction and implementation. It was first reported back in June 23, 2009 that the BC government under the leadership of Gordon Campbell intended to harmonize the two taxes. Full attention to this tax didn’t come until after the 2010 Winter Olympics in Vancouver had ended. Before it was to be implemented on July 1, 2010, the raucous was not only raised by BC citizens but former premier Bill Vanderzalm in campaigning to get the HST abolished. After the HST was made official in BC, Vanderzalm still continued on his campaign while Gordon Campbell’s popularity soon dipped to single-digit percentages, leading him to retire.
Now the fate of the HST lies in the hands of the citizen of British Columbia. All registered BC voters including myself were sent a mail-in yes/no ballot in which one is to vote not on keeping the HST but on abolishing the HST. The deadline for mailing in the vote was Friday July 22nd. During that time, there has been many pro-HST and anti-HST rhetoric. Those against the HST would speak of their drawbacks, most notably the increase in expenses for BC citizens and the businesses that have either faced huge economic difficulties or closed. The common citizen should also have its own experience with the HST in the past.
Those for the HST have come from economics or other sources that have studied the HST in the past. On May 4, 2011, an independent panel commissioned by the BC government released a report on the impact of the HST in BC. The report concluded that “Unless you are among the 15 per cent of families with an income under $10,000 a year, you’re paying more sales tax under the HST than you would under the PST/GST: On average about $350 per family.” The report also predicted that by 2020, the HST is anticipated to result in a BC economy that will “Be $2.5 billion larger than it would be under the PST. That’s about $480 per person or $830 per family.” There was even a prediction from the University of Calgary that the HST will lead to 600,000 more jobs in the next ten years. Economists have even spoken of the potential damages and drawbacks that could happen if the HST is abolished.
Anyways the referendum is over. If you didn’t mail your ballot in by now, tough cookies. Time will tell what the result of referendum will determine. Time will also tell which tax system was supported by the people and whether it will pay off in the long run. Stay tuned. The future of BC and its economy will be decided.
WIKIPEDIA: Harmonized Sales Tax.Wikipedia.com. 2011. Wikimedia Foundation Inc. <http://en.wikipedia.org/wiki/Harmonized_Sales_Tax>