3 , 2009
Guarantees HST Cash-Cow
because the harmonized sales tax (HST) is a fait accompli
doesn't mean it is a dead issue; in the next few years some
economists will compare predictions against results and many
voters will seek revenge.
can stop the HST thanks
to Liberal Leader Michael Ignatieff pledging support of
the federal Liberals for the legislation. That pledge came
a day after provincial Finance
Minister Colin Hansen signed the detailed agreement that
commits BC to repaying $1.6 billion in transition funding
if it backs out of the deal before 2015. One can argue that
is a small price to pay since we would only be losing what
we wouldn't have had without the bad tax, but the odds are
nearly zero that a new government after the provincial election
in 2013 would suffer a $1.6 billion penalty rather than wait
two more years to either withdraw or renegotiate the provisions
of the tax.
HST is a done deal, until at least 2015, although the rate
could change any time after July 1, 2012. The GST has been
in effect for 18 years; all that has changed over the years
is the rate for the GST.
Premier Campbell claims that the HST is "the single most
important economic measure we can undertake as we vie to strengthen
our province's economy" (Hansard, Nov 25), some
might wonder why the United States continues to reject that
type of tax, even though it is clearly in need of measures
to strengthen its economy. Some in the US are arguing for
a VAT (value added tax like the GST/HST) on the grounds that
it is a "money
machine". Adoption of the tax may have less to do
with strengthening the economy and more to do with efficiently
picking taxpayer's pockets. Perhaps Campbell meant strengthening
government revenues rather than strengthening the economy.
September 2009 budget documents included
a table which showed estimated HST revenue as $6.5 billion,
sufficient extra revenue to fund income tax cuts, point-of-sale
rebates, housing rebates and energy exemptions while still
leaving the government "revenue neutral". In other
words, it's a tax grab. Inflation will diminish the value
of the income tax provisions while increasing the value of
the HST take.
will wear it because he promised he wouldn't do it, but like
the GST, no government will kill that cash cow! Several federal
Liberals, Dosanjh and Martin come to mind, are likely to lose
their seats over Ignatieff's support for the HST. With the
next provincial election 41 months away, it is far too early
to guess how it will affect Campbell's successor.