Our children will pay for PST/HST fiasco

Love or hate the outcome, the referendum on the HST saw democracy in action. British Columbians answered the question about extinguishing the tax with a majority in favour of scrapping it. However Chilliwack residents, recognizing its economic benefits, voted to keep it.

Love or hate the outcome, the referendum on the HST saw democracy in action. British Columbians answered the question about extinguishing the tax with a majority in favour of scrapping it. However Chilliwack residents, recognizing its economic benefits, voted to keep it.

“British Columbians have made their choice and we will honour that decision,” said Minister of Finance Kevin Falcon. “Now, more than ever, government must provide British Columbians economic stability and focus our attention toward growing our economy to create jobs.”

No doubt. As this mess gets straightened out, there’s going to be winners and losers but there could be some second-guessing on the merits of the Yes vote.

“You watch, a month from now the majority will shift to pro-HST when they look at what they voted for,” said MLA John Les who was clearly disappointed in the outcome.

“I don’t know that it affects us at the municipal level,” said Mayor Sharon Gaetz. “Some businesses are really happy such as hairdressers and restaurants. The people building larger homes are somewhat disappointed about it. There could be a drop in development.”

The transition could take about 18 months. Legislation has to be introduced at both the provincial and the federal levels and an entire bureaucracy will have to be re-tooled to staff and administer the PST for registration of businesses, audits, appeals, rulings, provincial tax information phone lines, billings, remittances, collections and refunds. It’s not going to be cheap and it’s in addition to the repayment of $1.6 billion to the feds.

All that Yes jubilation could be short-lived. As the PST gets uncoupled from the GST, the move could ultimately be a job killer. The ‘Yes’ voters might think it’s great for the little guy but when businesses have to start coping with the economic, time-consuming burden of the old system and decide to cut expenses, it could be the little guy who’s first on deck for lay off.

Industry executives will weigh future options with an eye on provinces that offer better tax breaks and accounting. Ontario will happily pick up the pieces. Our loss is their gain. They’ll be laughing all the way to the bank. Their HST system came into place the same time ours did. They took it in stride and now have the economic edge to attract business at a critically vulnerable economic time.

“When we joined those discussions on the HST with the federal government they were already in discussions with Ontario,” said MLA John Les. “They had been talking since March 2009 to go ahead. We joined in that discussion several months later. Now, arguably going back will be more difficult than implementing it in the first place. Our government wants this to happen as soon as possible. Every day that goes by is one of uncertainty.”

What is certain though is that this vote was about politics, not policy.

“People didn’t trust the way it was brought in,” said Gaetz. “It’s not acceptable to make a promise and not keep it. The Liberal messaging was not adequate.”

But Gaetz sees one possible opportunity. “I am pleased that people are demanding an accountability. Governments in the future will be more careful about the things they say and promise. There were many reasons why people made their choices other than economics.”

The Yes vote was a painful blow for the Liberals but we could all feel that sting in the long run. Doing a PST U-turn threatens the growth of our future economy. As for the $1.6 billion going back to Ottawa, it will be tacked onto the province’s debt. Who’s paying? Our children. That’s not the legacy the HST supporters had in mind.

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