The B.C. government’s planned ‘Harmonized Sales Tax’, or H.S.T., has stirred up controversy since it was first announced by Premier Gordon Campbell on July 23. And while some groups are applauding the government’s plan, others are arguing that the province has neither a mandate or a solid rationale for the proposed tax.

Proponents of the H.S.T. argue that by eliminating the current P.S.T. in favour of a joint federal-provincial sales tax, businesses will face less paperwork and fewer differing standards. On the other hand, critics argue that the province will lose its ability to decide where to levy sales taxes, and businesses currently exempt from the P.S.T.--including businesses in the restaurant and tourism sectors--will face a significantly increased tax burden.

But Columbia River-Revelstoke MLA and NDP Rural Caucus Chair Norm Macdonald argues the government lacks both a mandate from the general public and the support of the business that would be most effected by a shift to an H.S.T.

“We are starting to get a number of people that are concerned,” said Macdonald in an interview with the Times Review last week. “It’s the heliski and backcountry operators. It’s restaurants and people on fixed incomes. Those are the people that are contacting the office, and basically what they’re saying is that they think the tax is going to impact their businesses very negatively.”

Like many critics of the government’s H.S.T. plan, Macdonald argues that the B.C. Liberals gave no indication that they were planning on introducing a new sales tax until after last May’s provincial election.

“The Liberals made a clear promise during the election that they weren’t going to bring in new sales taxes,” said Macdonald, continuing: “and now after [the] election they have what is really a massive tax hit and [many] would are that it is a regressive type [of] tax, in that you have a lot of people that simply don’t have the ability [to pay higher taxes] forced to pay.”

“It is very clearly a shifting. There are places where people are going to be spending less and then there are other businesses that are just going to be hammered by [the H.S.T.],” said Macdonald.

Macdonald notes that one of the areas which could be hit the hardest by a shift to the H.S.T. are backcountry operators, including those in the heliskiing businesses. And, says Macdonald, backcountry tourism businesses will face “A whole host of costs that the operators don’t feel the tourist is willing to take on.”

While the government has said that any shift to an H.S.T. would be done in a ‘revenue neutral’ manner, Macdonald argues that government hasn’t given any evidence to support the revenue neutrality of their H.S.T. plan.

“What was initially said by the government was that it is going to be revenue neutral, and what they have yet to do is provide any proof at all of that,” said Macdonald. “What we have been asking is for an explanation of that statement, and it simply isn’t there -- they have provided no documentation to back that up.”

Macdonald continued: “What the C.D. Howe institute is saying -- and the C.D. Howe Institute is a right-wing think tank -- they’re estimating that there will be a $4 billion tax grab with this, that the province will come out $4 billion ahead over the next three years ... so if that’s an accurate statement, it’s difficult to see how it’s possible to have revenue neutrality with that.”

And while Macdonald does acknowledge that a shift to an H.S.T. would reduce paperwork for businesses, he argues the B.C. government’s H.S.T. plan is really an attempt to bring a spiralling deficit into line.

“I think much of the appeal of the H.S.T. was that the federal government is offering $1.6 billion to them to be spent however they like if they join in with the H.S.T., and they get what looks like a windfall of additional take revenues: that’s the appealing part,” said Macdonald.

“This is a government that, during the election, promises that the deficit would only be $495 million,” continued the MLA. “It clearly will not come close to that, but, I think, $1.6 billion will help make it closer than it likely would have been.”

Ultimately, Macdonald says he believes pressure from both industry and the public might cause the province to reconsider a shift to an H.S.T., and Macdonald said he encourages members of the public to contact both him and the government to express their concerns about the plan.

“If people care about the issue, they should take the time to e-mail me as their representative and let me know how they feel about it ... If they are opposed to it [the H.S.T.] going forward, there are petitions ... so there is an opportunity to stop this, but it would take a very strong public push,” said Macdonald. “The weak ground the government is on is that they have no mandate for this, and if there is a strong enough response, they will go in another direction.”

Forest Products ass’c applauds HST move

One industry group which has applauded the proposed move to the H.S.T. is the Forest Products Association of Canada.

The group issued a press release after the premiers announcement which outlined the benefits of “a streamlined tax system.”

“As markets for forest products rebound and as B.C.’s economy emerges from the recession, a streamlined tax system will reduce input costs, encourage new investment and enhance productivity,” said Avrim Lazar, the group’s president, in its release.

The group argued that at 12 per cent B.C.’s H.S.T. will be the lowest in Canada and “will remove more than $2 billion in costs for B.C. businesses on an annual basis including an estimated $140 million for B.C.’s forest products sector.”

Ultimately, said Lazar, a move to the HST “will greatly enhance the competitive position of British Columbia’s forest products industry and help keep high-skilled, high-paying forest industry jobs in B.C.”