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[absolon]

The HST as it sits transfers tax burden from business sector to consumers, some $2 billion a years worth. About 40 or 45% of provincial GDP comes from exports and no tax is reclaimed from them in spite of the use of provincial services and infrastructure to generate that business; effectively a subsidy to those who purchase the exports and the companies who sell them.

The new tax is applied to a much broader array of goods and services in order to make up that shortfall and comes out of the pockets of individuals instead of the entities that benefit from the use of the services and infrastructure. That $2 billion is actually a couple of billion a year in perpetuity shifted on to the back of Joe taxpayer and justified by some nebulous and ideologically based promises of increased economic prosperity at some time in the future that will come from giving the business sector an easier ride than they are already receiving.

Business is an entity that combines capital and labour to earn profit; the labour is as important to the business' ability to earn profit as the capital is to creating the jobs. Providers of capital have no special entitlement to subsidy simply because they hire the labour necessary to earn profit. Working is what most of us do to support our selves, ie. supplying the labour, and it's out of that payment we receive for our contribution to the profit making exercise that the subsidy to business comes under the new HST system. Not every business plan is a good one and if a business can't cover the costs of operating without consumers subsidizing it's use of the infrastructure and the services that allows it to operate, it shouldn't survive. In pushing for this tax, business is rent seeking; looking to increase profitability without increasing productivity.

Not everyone agrees with the idea that business must be coddled at any cost or that doing so is the route to economic prosperity or that supply side economics work. Some people believe that it is the consumer spending that drives the economy rather than creating excess supply capacity, that taking money out of their pockets to subsidize business access to infrastructure will have substantial negative effects on economic recovery and growth or lack thereof at home. Canadian business has a poor record of innovation and productivity improving investment and has hoarded all the cash benefit they have received from the reduction of corporate tax in the past rather than investing it in new capital plant to create new jobs. Continually increasing subsidies isn't going to reverse that and start creating jobs or driving economic growth but it does make taxpayers worse off. Increased consumer spending will have far greater effect but that can't happen when the consumer is forced to pay costs business should rightfully be paying.

[alwaysfishn]

You can look at the HST as a subsidy to business if you like.

Removing that subsidy from business in BC while other provinces and countries are giving their business's that subsidy, creates an unequal playing field. Being part of a global economy, it is critical that the BC tax system provide industry the same "subsidy" as is provided in other provinces or countries. Reverting back to PST will increase business's cost of goods making them less competitive. This will require a cut in costs in order to remain competitive. Jobs will be lost and some businesses may need to move out of the province. It will influence whether any new businesses locate to BC.

On the other hand the restaurant and many service businesses in BC will do well.....   for a while, until other job creating industry starts leaving the province because they can't be competitive.

[JustinG]

If you did not have time to read up the link below is an interesting perspective.

http://youtu.be/nZXu3LXNwEg

[skaha]

-One of the big winners with HST was larger forest companies... did they build new mills and create jobs or did they pocket the cash and export raw logs.

--the biggest subsidy to industry in BC was cheap hydro power... they didn't need anything else... oh yah this government screwed that up as well by artificially raising prices of power with Run of River contracts that we didn't need.  Good old WAC Bennett whom I don't believe anyone would call left wing.. still saw value in Government providing.. true infrastructure.. ie. Hydro, Highways and Rail rather than taking money from the workers and trying to bribe industry to come here.
--By providing infrastructure we are not favouring fly by night companies who will flea as soon as they are given a better cash in pocket offer from elsewhere.
--Taxes provide uncertainty for us and industry as they know there can change... almost without warning.. whereas a railroad is a much more stable guarantee of longer term commitment... that won't be taken away...oops... forgot this government gave that away to.

[JustinG]

what a load of  garbage!
the schools , medical system, social infrastructure etc.  all bought and partially paid for by the hard working people of the day's tax dollars,  Industry has paid next to nothing.

 The ME ME self entitled and pathetically greedy generation has benefited from those systems as well, yet they don't want to reinvest in the next generations system? They want to blame the older generation for debt loads? Perhaps your right, perhaps it would have been better that you were just given basic litracy at school and the only job available to you is ditch digging. You then only have to hope that your health doesn't fail because you don't have hospitals or on ditch digging wages you or your family can't afford a doctor. Oh, your life expectancy has now dropped twenty years because of disease and overwork/ed ...until you drop, remember no pensions.

The debtload blame has been directed at us, yet you and your generation have benefited just as much, yet you think you are hard done by. I wont even bring up what has been siphoned out of the medical and pension systems, to pay for .... maternity leave, child care, preschool......?

perhaps we should be looking at encouraging industry, innovation, resource extraction, all with Canadian labour. No exporting of raw materials, manufacturing and good paying jobs with tax income to the coffers. Perhaps open Global economy has been more to blame, lost jobs = lost tax base= debt load.

Perhaps you should watch that little video link I posted.

Seriously??? The schools, medical , social infrastructure etc are NOT ALL PAID FOR. Our national debt is approaching $600 BILLION dollars and that does not include Provincial and Municipal debt. Your parents left you a clean slate with NEW INFRASTRUCTURE. They came back from WWII and built infrastructure and made policy that allowed your generation to prosper (INCLUDING MEDICARE).

Industry does pay it's fair share - many of the projects we look at barely make money here and much of it is to do with taxation and royalties paid to the various levels of government. My business certainly pays its fair share.

"ME ME ME" Generation???   What a joke. When I came out of school in the 90's there were NO jobs in BC because of a hostile climate towards business. I built my own business from nothing, I have NEVER taken any type of social assistance EVER and all my student loans were paid off in FULL. After YEARS of making nothing, budgeting to the penny, my business finally took off 6 years ago and I can say my income taxes alone help to support at least 3 teachers or 2 nurses or 1 doctor or whatever here in BC - plus all the tax benefits the city, province and federal governments get from my corporate, property and sales (HST) taxes. I would say the Boomer's are the ME ME ME generation and stop patting yourselves on the back for the results of your parents hard work. What my greatest concern is, is that my kids will not have a decent education, proper medical coverage or a basic pension because the system will be so leveraged from what your generation is demanding that our tax dollars can barely support debt servicing costs never mind the social programs that Canadians hold dear (ie Greece, Spain, Italy, Ireland ... ). There was adequate warning over the past 20 years that this huge demand was coming but during your prime earning years you did not want to pay for the goods being received or go into a surplus to pay for the significant financial obligations coming.

Finally, globalization is a reality and is here to stay during our lifetimes. You use some nice "buzz" words but in order to attract NEW business to support new jobs you have to make it worth it on a risk adjusted basis for a person (or company) to venture their hard earned capital. Take your example of resource extraction. To actually find an economic deposit (1 in 100 active exploration projects) is tough, development costs and timing are considerable (+$100M and 5 to 7 years of permitting), building mine infrastructure in BC is at the high end of global capital costs (ie Galore in NW BC is +$5 billion) and if you actually wanted to process this in BC you would need another smelter here (try permitting that, and who want that in their back yard) and would cost ~$3 Billion. Conclusion - There is ONE company here in BC that can do this and it would risk the entire company if the project failed to yield positive economics. Because of this you need to provide incentives (tax, power credits etc) in order to increase the probability of success as well as attract outside money (our tax base cannot fund this). BUT you seem to be against a more efficient tax structure or incentives for new business - the government and "industry" are a printing press for money and willing investors are plentiful and magically appear...

[alwaysfishn]

--One of the big winners with HST was larger forest companies... did they build new mills and create jobs or did they pocket the cash and export raw logs.

--the biggest subsidy to industry in BC was cheap hydro power... they didn't need anything else... oh yah this government screwed that up as well by artificially raising prices of power with Run of River contracts that we didn't need.  Good old WAC Bennett whom I don't believe anyone would call left wing.. still saw value in Government providing.. true infrastructure.. ie. Hydro, Highways and Rail rather than taking money from the workers and trying to bribe industry to come here.
--By providing infrastructure we are not favouring fly by night companies who will flea as soon as they are given a better cash in pocket offer from elsewhere.
--Taxes provide uncertainty for us and industry as they know there can change... almost without warning.. whereas a railroad is a much more stable guarantee of longer term commitment... that won't be taken away...oops... forgot this government gave that away to.

It's not possible to debate policy with someone who has a hate on for the current government. While there are many things that the Liberals have done that I disagree with, I can seperate what I see as good policy and bad policy.

The HST unfortunately was dumped because people couldn't differentiate good tax policy(HST) from their hate for the governing party....

The grass always seems greener on the other side of the fence. I experienced NDP governments in both Ontario and BC and the grass is definitely not greener on the NDP side of the fence.

By the way, I'd appreciate if you corrected your post, as the diatribe you posted looks like it was written by me.... 

[Sandy]

Perhaps you should watch that little video link I posted.

Seriously??? The schools, medical , social infrastructure etc are NOT ALL PAID FOR. Our national debt is approaching $600 BILLION dollars and that does not include Provincial and Municipal debt. Your parents left you a clean slate with NEW INFRASTRUCTURE. They came back from WWII and built infrastructure and made policy that allowed your generation to prosper (INCLUDING MEDICARE).

I think I said Partially paid for, and as for the physical infrastructures that I think has been paid for, the maintenance and expansion to meet growing needs is what I think you are complaining about Regarding the Infrastructure building immediately post war, that is a time tested and proven method of getting people back to work. Cessation of the war effort produced high unemployment and the returning surviving troops requiring work. Put them too work, keep them occupied, collect taxes, don't pay unemployment or welfare. Costly yes but for social security, probably was worth it, knowing what they knew then.

Industry does pay it's fair share - many of the projects we look at barely make money here and much of it is to do with taxation and royalties paid to the various levels of government. My business certainly pays its fair share.Be proud of it as many don't

"ME ME ME" Generation???   What a joke. When I came out of school in the 90's there were NO jobs should have been here in the early eightiesin BC because of a hostile climate towards business. nope climbing interest rates caused a slowdown, due to fears in climbing inflation, due to just recovering from another meltdown a decade before, not forgetting the market meltdown in 87 I built my own business from nothing, I have NEVER taken any type of social assistance EVER and all my student loans were paid off in FULL. After YEARS of making nothing, budgeting to the penny, my business finally took off 6 years ago and I can say my income taxes alone help to support at least 3 teachers or 2 nurses or 1 doctor or whatever here in BC - plus all the tax benefits the city, province and federal governments get from my corporate, property and sales (HST) taxes. Good for you a great success story, but... did you really pay 100% of the cost of your tution, or did you pay approx 45% as do others, taxpayers picking up the rest? I would say the Boomer's are the ME ME ME generation and stop patting yourselves on the back for the results of your parents hard work.Most baby boomers I know fully understand and respect that they owe a huge debt to society in general and the sacrifices they made to give us a jump start, myself included. What my greatest concern is, is that my kids will not have a decent education, proper medical coverage or a basic pension because the system will be so leveraged from what your generation is demanding that our tax dollars can barely support debt servicing costs never mind the social programs that Canadians hold dear (ie Greece, Spain, Italy, Ireland ... ).Perhaps you should live there, I have in most of them, and yes I would have an easier time, Canada's social programs are good but in EU countries there is a differant system. The reasons for the EU debt crises is more related to devaluation when changing over to the euro.   There was adequate warning over the past 20 years that this huge demand was coming but during your prime earning years you did not want to pay for the goods being received or go into a surplus to pay for the significant financial obligations coming.Yep, I agree, we sleeping at the switch, we should have recognised that the time lag between "Globalisation" and the changes to the Canadian economic structure when it became much more fluid

Finally, globalization is a reality and is here to stay during our lifetimes. You use some nice "buzz" words but in order to attract NEW business to support new jobs you have to make it worth it on a risk adjusted basis for a person (or company) to venture their hard earned capital. Take your example of resource extraction. To actually find an economic deposit (1 in 100 active exploration projects) is tough, development costs and timing are considerable (+$100M and 5 to 7 years of permitting), building mine infrastructure in BC is at the high end of global capital costs (ie Galore in NW BC is +$5 billion) and if you actually wanted to process this in BC you would need another smelter here (try permitting that, and who want that in their back yard) and would cost ~$3 Billion. Conclusion - There is ONE company here in BC that can do this and it would risk the entire company if the project failed to yield positive economics. Because of this you need to provide incentives (tax, power credits etc) in order to increase the probability of success as well as attract outside money (our tax base cannot fund this).Err.. sorry, guess you were unaware that I ran and owned a Company from the mid-eighties through to the early nineties, We ( partners) employed about 60 people up to 100 when required seasonally, We were a Service Company supplying field exploration services from claim staking up to and including development, both here and abroad. I also owned a Diamond Drilling Company, as well as being a vendor and owner of prospects. but then the NDP came into power, declared war on the mining industry, the majors withdrew from BC, basically overnight. Want to still talk about tough decisions?subsequent to that I became a head prospector and project manager for one of the biggest companies in the world. I worked, in every continent except Antarctica .

..[BUT you seem to be against a more efficient tax structure or incentives for new business - the government and "industry" are a printing press for money and willing investors are plentiful and magically appearb].[/quote]..[Not against them at all, just your view.[/b]


I think that you have done well but fail to realise as does many of your as well as my generation, that we are where we are partialy due to events or actions we could not control, and have all benefited in some way or another to them whether we like it or not. If you don't understand that, forget the EU model and look at any of the south Saharan countries, They have exactly the tax system you are talking of.

[JustinG]

Sandy, I am not complaining, I consider it debating. Yes, I agree, an infrastructure program is very useful in getting people back to work, history records this well. I believe that is what is going on right now with some of the largest infrastructure projects this province has seen in years and we are playing catch-up (Port Man, Golden Ears, Sea to Sky expansion etc). These projects kept our economy relatively steady here in BC while much of the rest of the world was experiencing what was being compared with the crash of 1929. I agree with the user-pay so there is direct revenue to pay for the debt. I sat on the Board of Governors for a well regarded technical school in the province for two terms and can say that the freeze on capital projects in the 90's cost us. I was sitting with some fellow students and the NDP Finance Minister of the day approached us with cameras in tow and asked us "How we liked the extra instructors and staff ... " (they increased funding to staffing while freezing capital projects). I replied "Great, where are the class rooms to put them in?". The cameras shut off and the photo-op was over.

Rates in the 80's were out of control not the 90's. The 90's saw the greatest creation of wealth ever. The "crash" in 87, the market recovered by 89. The S&P 500 from 1990 to 2000 saw an increase of over 300%. BC missed the greatest boom in history up to that point because no one wanted to do business here.

As for the cost of my tuition, I paid 100% of my Masters in Finance earned from a well regarded business school in the US. My Undergrad degrees I would have paid 20% of the actual cost - that was the ratio used in the 90's and am unsure what it is today. I would say that I have more than paid that back a long, long time ago.

I am well aware of the issues causing the crisis in Europe. I am having lunch with David Dodge today and I am pretty sure we will be discussing this. Part of the issue is not devaluation but the inability of the debtor nations to devalue their (non-existent) domestic currency to allow for competitive export prices. The only avenue is spending cuts or "pay cuts" and Labour is not taking kindly to this.

Mining in BC in the 90's, ouch. You have my condolences.

Glad you disagree, healthy debate is constructive.