Another opinion.
Liberals distort tax history to justify their HST flip-flop
By Vaughn Palmer, Vancouver SunApril 3, 2010 When Finance Minister Colin Hansen tabled the enabling legislation for the harmonized sales tax this week, he offered a justification that was completely at odds with his government's previous taxation policy.
"This is a bill that modernizes and enhances the competitiveness of the provincial tax system by eliminating the old, antiquated, inefficient and job-killing provincial sales tax," Hansen said in the house.
Old, antiquated, inefficient and job killing? The PST?
That's no way for a B.C. finance minister to talk about a tax that occupied a central position in provincial fiscal policy from the time it was first enacted to support social services in 1948.
Provincial governments of every political stripe -- Coalition, Social Credit, New Democratic Party and B.C. Liberal -- often tinkered with the tax, raising rates, adding exemptions.
But they jealously guarded the made-in-B. C. nature of the tax as a mainstay of their budget-making, a source of revenue on one hand, a way of dispensing incentives on the other. Both aspects were tailored to a unique provincial economy and political culture.
The federal government and provincial business leaders periodically called for Victoria to join with Ottawa in a single sales tax. Most economists could sketch the longterm advantages of the one tax over the two on the back of an envelope.
The pitches failed every time. Not because B.C. politicians failed to understand the longterm economic benefits, but because they feared the short-term political consequences of shifting from the relatively narrow PST base to the broader federal goods and services tax regime.
All those services, now subject only to the GST, where the tax bite would increase by more than double overnight. All those provincially authored exemptions that would disappear as well. No provincial government was prepared to risk the inevitable political fallout.
Carole Taylor, Hansen's predecessor as finance minister, presided over an extensive study of harmonization during the Liberals' second term.
She concluded that while many businesses could benefit, the tax shift would be punishing for provincial consumers and, not incidentally, for the politicians who depend on their support to get elected.
Asked point-blank whether the B.C. Liberal government would harmonize the provincial sales tax with its federal counterpart, Taylor's reply was succinct and final: "Not on my watch."
Instead the B.C. Liberals embarked on an extensive and time-consuming review of the provincial sales tax, with an aim to reforming it to better suit a changing provincial economy.
Presiding over the review was then-revenue minister Rick Thorpe who noted the added advantages of a homegrown solution. "We do not want to give our sovereign tax rights away to the federal government."
As I've noted before, there's a certain irony in the way harmonization was rejected by Taylor, one of the more "liberal" Liberals, and by Thorpe, one of the more conservative ones, both of whom retired at the subsequent provincial election.
I mention it again only to note the grotesque distortion in Hansen's current justification for harmonization, implying, as it did, that his predecessors had unwittingly maintained a tax regime that was inefficient and killing jobs in the provincial economy.
Another distortion was evident in his chosen title for the enabling bill, the Consumption Tax Rebate and Transition Act, which made no mention of the harmonized sales tax that made the legislation necessary.
"I'm not quite sure why the government has chosen this rather modest title that only obliquely suggests it has anything to do with the HST," said NDP finance critic Bruce Ralston in his opening comments on the bill in the legislature Thursday.
"It perhaps is an excess of modesty on the part of the minister or perhaps it's a realization that the words 'harmonized sales tax,' if it were to really identify the bill for what it was, might provoke even more public anger."
Ralston went on to suggest alternative titles: "The holding up B.C.'s end of the deal with the federal government to get $1.6 billion in swag and implement the HST act. The single best thing we can do for the B.C. economy but didn't want to tell you about before the last election act. This tax is going to fund health care, but we didn't think of that explanation for eight months." And so on.
Better still was his tongue-in-cheek suggestion that the title might violate the truth-in-advertising provisions of the Consumer Protection Act.
"I say that this particular title of this particular bill falls squarely within the definition of a deceptive act or practice. It makes no reference to the HST. Everyone knows it's about the HST.
"[But] they don't even have the jam to put it in the title of the bill."
So it went in the first instalment of a debate that is expected to consume most of the available time in the legislature this month.
There's the barrel. There's the fish. Fire away, Opposition members. The government has surely created a target-rich environment.
vpalmer@vancouversun.com
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Topic: Fight The HST! (Read 172637 times)