Tax hike can stay if HST defeated, Falcon says

The Liberals are in the process of making another big mistake on the HST, one that will rekindle public anger about their sneakiness.
The anti-HST initiative — supported by more than 700,000 British Columbians — was clear. The goal was to kill the new tax and go back to the provincial sales tax “with the same exemptions as were in effect as of June 30, 2010,” according to the petition and the official Elections B.C. summary.
The campaign succeeded. That didn’t necessarily mean the tax would go. Under initiative legislation, the government can ignore even successful efforts.
But then-premier Gordon Campbell was also clear. He promised a binding referendum to see if British Columbians supported the anti-HST initiative. The people had spoken, the question should go to the voters and their decision respected, Campbell said.
Bill Vander Zalm, the improbable leader of the anti-HST forces, feared a trick. Turns out he might have been right.
Because eight months later, the Liberals are weaseling.
Finance Minister Kevin Falcon says the Liberals will ignore the critical element of the anti-HST initiative — the restoration of the exemptions in place before the new tax was imposed.
That means that even if voters defeat the tax, the government could continue to collect more than $1 billion a year in increased taxes from individuals and families. (The province’s panel estimated the increased cost at $1.3 billion.)
It’s a transparently sneaky attempt to get around the initiative. It risks rekindling all the anger about the way the tax was sprung on British Columbians. And it makes the Christy Clark government look as bad or worse than the Campbell government.
The HST works in two ways. It’s a tax shift from businesses to families and individuals, because businesses had to pay the PST and don’t have to pay the new tax.
And it increases taxes on individuals and families, because a wide range of goods and services exempted from the former provincial sales tax are subject to the HST.
The successful initiative campaign called for the tax be eliminated and all those exemptions restored.
That’s the message Campbell promised to heed.
And now Falcon is breaking the promise, making a mockery of the anti-HST petition and Campbell’s commitment.
It’s a position certain to anger a lot of voters. The New Democrats have spent a lot of question period time asking Falcon about whether the government would restore the former sales tax exemptions.
The PST didn’t apply to restaurant meals, for example. The HST does. The industry — supported by StatsCan numbers — says the extra seven per cent tax on meals has hurt.
But Falcon says that even if voters reject HST is rejected, the government might extend the PST to restaurant meals. The provincial tax didn’t cover labour, or bicycles, or some health treatments. But Falcon says that if even the HST is axed, the provincial sales tax might be imposed on all those things.
The government will decide after the referendum, he says.
That would a giant tax grab and a fundamental betrayal of the commitments on the referendum
Maybe the Liberals know what they’re doing. They have a bunch of people being paid in the six figures — at your expense — to come up with clever strategies and messaging to save the tax. And they are spending $6 million-plus to sell it.
But Falcon’s approach seems weirdly wrong.
The HST initiative called for a return to the provincial sales tax, with the exemptions. Campbell promised a binding vote on that question.
But Falcon is it doesn’t matter what voters say in the referendum, the government is free to leave the tax hike in place. The government knows best.
Which is the attitude and approach that cost Campbell his job.
Clark’s narrow byelection victory should be a warning. She has not yet won over voters and hopes for a fresh start can fade fast.
A betrayal on the fundamental HST issue would be disastrous.
Footnote: The government is also running a risk with its heavy spending to try and secure a yes vote for the HST. Falcon announced a $5-million ad campaign this week, on top of $700,000 already committed for a pro-HST flyer to go to every household and undisclosed costs of telephone town halls and the HST information office. There’s a chance the ad effort will backfire, angering taxpayers.