Government concessions needed to sell the HST

Thursday, August 26th, 2010

I have asked the companies involved about prices possibly being reduced — as the government has outlined — I have got quizzical looks and laughter rather than commitments.

Barbara Yaffe

The British Columbia and federal governments need to get creative in resolving the pickle they’ve got themselves into over the harmonized sales tax.

It is now clear, following last week’s dismissal by B.C.’s Supreme Court of a lawsuit trying to quash the citizens’ anti-HST petition, that the two governments must take action.

It is not the B.C. legislative committee, now charged with considering what to do with the hot-potato petition, that has the real power to address this issue. The committee will merely preside over a sideshow that ultimately will go nowhere, given that all roads lead to negative or non-binding outcomes. For example, if the committee decides to return the matter to the legislature for a vote, the B.C. Liberals surely would refuse to nix the tax. Alternatively, if a September 2011 referendum is held and voters reject the tax, the government again is not legally obliged to act on that outcome.

So, the matter really needs to be addressed by the provincial and federal governments, which, by law and through a tax agreement, mandate and regulate the harmonized abomination and have power over what must be done to make it minimally palatable to the population.

Because British Columbians have spoken. At present the tax is not acceptable. It must be made so. It is not simply, as the government wishes it were, a case of telling British Columbians that the tax is good for B.C.’s economy.

Citizens have heard this message ad nauseam from MLAs, MPs and economists. This argument may be sound but clearly it is not sufficient.

It is time for the B.C. Liberal government, backed by the federal Conservatives, to offer tangible concessions to taxpayers in a bid to win the support they never got to implement the new tax.

The Gordon Campbell crowd immediately should announce, as the Dalton McGuinty government in Ontario did to positive effect, that coffee and newspapers will become HSTexempt.

Again, following the Ontario government’s lead, Finance Minister Colin Hansen should start mailing cheques to middle-and lower-income British Columbians to help them adjust to the tax — just as the B.C. government received $1.6 billion in transition funds from the federal government to help it adjust.

It may be that the two governments will have to renegotiate their tax agreement in order to boost Ottawa’s financial help for the transition. This is a price that must be paid for the governments’ remarkably inept handling of the file.

Furthermore, the Campbell government should commit to issuing quarterly public reports, starting a year after the HST implementation, that will back up its pledges that consumer prices will come down as a result of an estimated $2-billion reduction in costs for B.C. businesses.

People quite simply do not believe that this will happen, even though common sense holds it should as the business sector stops paying provincial sales tax on its inputs.

To date, I’ve noticed higher prices on everything from my takeout coffee to my cable bill. Whenever I have asked the firms involved about prices possibly being reduced — as the government has said — I have got quizzical looks and laughter rather than commitments.

If people are to have any confidence that consumer prices eventually will come down, they will need proof.

A government agency should be assigned to probe, on a regular basis, prices being charged to consumers to ensure that what the government has said will happen will. Promises are cheap.

Only after such concrete measures are taken to address the electorate’s concerns about the HST will citizens be prepared to accept the tax, however grudgingly, and move on.

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