Friday, July 24, 2009

The HST, Gordon Campbell and the Clark government

The "harmonized tax" plan makes me wonder if the Campbell government has lost its way.
It's not the plan's substance, in fact, though there a lot of questions about the costs and benefits for different groops.
It's the way Gordon Campbell, with no warning or consultation, imposed a major tax change. The new tax system will shift taxes from business to individuals. Some industries will win and some - like the restaurant business - will lose.
The tax plan wasn't mentioned in the election campaign three months ago. There have been no discussion papers or reports. The Liberals rejected calls for the harmonized tax and said the change wasn't on the agenda.
And then imposed it.
Here are the basics. Right now, individuals and businesses pay seven-per-cent provincial sales tax and five-per-cent federal GST on most goods and services they buy.
The federal government - and many business groups - would like to see one harmonized tax. Three provinces have already merged the GST and provincial sales tax - Newfoundland, New Brunswick and Nova Scotia.
Campbell proposes to follow them with a 12-per-cent merged GST and PST, effective next July 1. The tax will go to Ottawa, and B.C. will be sent its share.
But that's just the start. Businesses can deduct GST they pay from their tax bill. Now they will be able to deduct PST as well, as it is included in the harmonized tax.
That will save them - and cost the government - about $1.9 billion in what had been provincial sales tax. That's a 37-per-cent drop in PST revenue.
But Campbell said the change would be revenue neutral. The overall money coming into government, needed to pay for schools and hospitals, would not go down.
Which means someone else is going to have to pay the $1.9 billion that business will be saving.
Most likely you. The new tax will apply to a long list of things that you didn't pay PST on. Heating oil and natural gas, cable and telephone, restaurant meals and non-prescription medicine. Movie and airline tickets and real estate commissions and dry cleaning and new house prices. You get the picture.
The theory is that while you will pay more in taxes, the companies will pass on their tax savings to you. It will work out.
There are benefits. Companies say that filing one sales tax return will cut their costs.
The federal government will give the province $1.6 billion for making the change, part of a national incentive plan.
And Campbell said that as other provinces give tax breaks to business in this way, B.C. had to follow.
The three Atlantic provinces aren't significant. But Ontario is proposing a harmonized tax for July 1, 2010 - the date B.C. now proposes to introduce its version.
Ontario's approach is strikingly different. Premier Dalton McGuinty started talking about the harmonized tax in January. The proposal was set out in the budget in March, with reports on the effects on business and families. The government pledged to use the federal incentive payment to cushion the impact of the change - most families would get transitional payments of $1,000 - and to exempt many goods. It also pledged to help affected industry sectors - tourism, for example would get an extra $40 million a year for marketing efforts.
Even the language was different. McGuinty's budget said the tax changes would be made "pending legislative approval and Ontario and Canada signing a tax co-ordination agreement."
Campbell presented a done deal. MLAs, both Liberal and New Democrats, might as well be cardboard cutouts. The public's views were not of any interest.
Campbell said the harmonized tax issue wasn't even on the radar for him at the time of the election campaign. Odd, since Ontario had announced its intention before that.
So, in a little over two months, the premier noticed tax harmonization and worked out a whole plan.
It reminds me of the last couple of years of the Glen Clark government. Too much certainty, too little planning, too bold enthusiasms and too little interest in the views of anyone outside the inner circle.
And that, we know, ended in tears.


Anonymous said...

Too much certainty, too little planning, too bold enthusiasms and too little interest in the views of anyone outside the cult.

Help me with this. Wasn't there a time when governments used budgets, passed after being debated in legislatures, to implement tax changes?

No need for such quaint notions in a crony capitalist system I guess. The cult doesn't even extend to the government MLAs, let alone the opposition and the voters democracy.

DPL said...

When Gordo mentions health and schools watch out. Another vision which includes some money from the feds. He needs lots of money to pay for his past and present dumb moves

Anonymous said...

Well we do have an entire to year bitch about this….ooopss…sorry that is not “consultation” I forget having a year to complain is meaningless. We should move to Ontario to avoid the HST…ooopppsss….how about Alberta ?

Gazetteer said...

Regarding Mr. Willcocks final sentence paragraph that brings up the lack of planning etc.....

Based on past performance of this government and the way the Premier's office runs and rolls out these initiatives all of a sudden and out of the blue, well, don't you all think there just might have been, at least in part a PR/deflector spin motive at work here?

(hey! where'd all those missing Email stories go?)


Norman Farrell said...

Temperature was rising on the BC Rail affair so a diversion was needed. They hurried up the Braidwood Report release and made the HST announcement in what seemed to be a rushed fashion.

Look in the past and see that bad news is always followed by an event manufactured to change the front pages. Remember the quickly arranged Canada Line ride for media folks to celebrate not the completion of construction but the nearing completion of the line. Sure enough, that chased some bad news off the front page.

Anonymous said...

As far as I'm concerned scumbell is a very dangerous man.Hes arrogant and full of pride.

DPL said...

I figure the home builders associations are about ready to take a skilsaw to Gordo if they ever get close to him. They are not the least bit pleased

Anonymous said...

A raise in the minimum wage will send small business and resturants into a tailspin so Campbell's against it but increasing the price by a 6% tax is OK, wheres the logic in that!