B.C. HST: High-handed Selfish Tax

Gordon Campbell says the BC HST is the "single biggest thing we can do to improve B.C.'s economy." It is? Generally, I’m a fan of sales taxes because they directly target consumption, which fits with my sense of fair play: The more you buy, the more you should pay.

By Tony Wanless / July 29, 2009

July 2009: The BC Liberals make a sudden conversion to a new tax, the HST.

Gordon Campbell says the BC HST is the “single biggest thing we can do to improve B.C.’s economy.” It is?

Generally, I’m a fan of sales taxes because they directly target consumption, which fits with my sense of fair play: The more you buy, the more you should pay.

But the timing of the government’s sudden conversion from a separate provincial sales tax regime to the Harmonized Sales Tax looks mighty self-serving to me.

Complaint: The HST makes for strange political bedfellows – and historical parallels

Victoria claims the new HST will save businesses $2 billion in (often hidden) administration and input costs. It cites the construction, manufacturing, transportation, mining, oil and gas, and forestry as beneficiaries.

But those are all big-company sectors. The reality is that BC’s thousands of small businesses, who make up about 95 per cent of businesses in this province, will probably be smacked because, by linking the provincial sales tax with the federal GST, the government will now be able to tax all kinds of previously untaxed goods and services.

Examples: New houses, which are already taxed heavily, will see tens of thousands of dollars added to the highest prices in Canada. Services provided by thousands of BC businesses will now be more expensive – at a time when their prices are under attack by recessionary forces – because they’ll be brought under the tax regime.

Sure, on a macro level, a harmonized sales tax is more efficient in that collection of the provincial tax will be moved to the federal government. Then, of course, there was that $1.6 million sweetener the feds cynically threw at B.C. to get them onside.

But despite the hard-sell of the benefits, I’m suspicious. The government always opposed harmonization, claiming it was unfair. Now, in the midst of a recession, it says it is fair.

I think what’s really happening is the government is desperate for money, and so is selfishly shoving itself into the marketplace to replenish a recession-ravaged cashbox it emptied during the good times.

I wish I could do that. And I’m sure many businesses hobbled by the downturn feel the same way.

After all, it would only be fair.