Sunday, May 2, 2010

HST became law in British Columbia April 29, 2010

The B.C. Lieberals rammed the law through the legislature cutting off debate on Thursday April 29, 2010 and it is immediately charged on certain items, e.g. plane bookings for a flight after July 1st or annual gym memberships.

Vaughn Palmer of the Vancouver Sun called it a "shamefest". I think Stalin might have applauded the undemocratic way the government used to adopt the law. To add insult to injury the bill is named Consumption Tax Rebate and Transition Act. That's quite a name for a law, which brings about a tax increase and a massive redistribution of the tax burden. (1984?)

And no, Lieberals is not a typo.

Gordon Campbell was asked during the election campaign if he planned to adopt the Harper Sales Tax, aka Harmonised Sales Tax, and his answer was no as it had been on other occasions before. Once a liar, always a liar, it seems. (When he got arrested for drunk driving in Hawaii he blatantly lied about the number of drinks he consumed before getting behind the wheel. That was shown by a professor at the University of Toronto at the time.)

The Harper Sales Tax will be administered by the federal government and the rate will be 12 percent. Some items, which are subject to the GST will be subject to a rebate of the provincial portion of the HST.

Here is some Information and propaganda about the Harper Sales Tax.

Information about the administration of the HST in British Columbia is also available on the Canada Revenue Agency’s website.

What is strange about those in favour of the HST is that it is usually the same crowd that does the never ending whining about tax cuts. (Nobody likes to pay taxes but they are a necessity in any civilised society.) But with respect to this tax they not only love the shift from businesses to consumers but, by implication, they also love a tax increase.

No matter what the Lieberals tell you about this being revenue neutral, a fourth grader could tell you that if you tax previously untaxed items without lowering the rate of taxation tax revenue will inevitably increase.

A document published by the C.D. Howe Institute claims:

"Burdens on business would decline substantially with harmonization to the GST base (Table 1 note i) but if such a reform were to be revenue-neutral ... the statutory tax burdens on consumer expenditures would necessarily rise. (p.10) (Nevertheless, on p.14 the author claims: "Overall, consumer prices in the harmonizing provinces [in the Maritimes] fell with the reform, although prices rose somewhat for shelter and clothing and footwear, and that fact tended to make the reform slightly regressive. [my emphasis]

Even those prices which fell didn't necessarily fall because of the HST. The essay is in the form of a commentary and it is therefore safe to assume that it was not peer reviewed.

Haven't we heard about revenue-neutral tax reform before? Yes. It was with another conservative government when Brian Mulroney made the same claim about the GST. In its first year the GST netted the government about twice as much as the Manufacturing Sales Tax it replaced.

The Harper Sales Tax inevitably means a tax increase and it remains to be seen if the $ 230.- credit for low income individuals is enough to offset it for the less advantaged.

"The annual amount of the credit will be $230 per family member for individuals with incomes up to $20,000 and families with incomes up to $25,000. The credit will be phased out by 4 per cent of income above the thresholds."

It may, or may not, be a significant tax increase but one thing is indisputably true: It is a redistribution of income from consumers to businesses.

It is estimated that harmonization will remove over $2 billion in costs for BC businesses. This includes an estimated $1.9 billion of sales tax removed from business inputs and administrative savings for BC businesses of about $150 million annually.

Next time you vote keep in mind how conservatives hit you in the pocket book. (Not that the LPC is much better.)

After Mulroney (and a brief interlude of Kim Campbell) the Tories were reduced to two seats in the House of Commons. If the anger expressed on comment pages of the Globe and Mail and the number of people signing the petition to have this put to a referendum is any indication, the same might be in store for Gordon Campbell.

But by then he will have once again served the interests of business and given the cost this would entail it will be almost impossible to get rid of the Harper Sales tax.