HST reduction fails to sway opponents

Former premier Bill Vander Zalm will be in Penticton Saturday at noon at the Sandman Hotel urging people to vote against the harmonized sales tax in the upcoming mail-in referendum.

  • May. 26, 2011 5:00 a.m.

Former premier Bill Vander Zalm will be in Penticton Saturday at noon at the Sandman Hotel urging people to vote against the harmonized sales tax in the upcoming mail-in referendum.

The visit comes days after the provincial government announced a two per cent decrease to the HST, the first point as of July 1, 2012 and the second reduction in July 2014.

Vander Zalm said Thursday he believes the announcement will hurt the government’s case.

“You can’t suddenly at the last minute try to bribe people,” he said. “People aren’t dumb. They see through all of this.”

Noting that the BC Liberals might not even be in government by the time the last point is dropped from the tax, Vander Zalm said the announcement was just a promise which may or may not happen, and which can always be reversed.

“The thing with a tax is that they can always increase it again” he said. “Governments never have enough money and they always want more. So if a tax is wrong, you can’t fix it by toying with its percentage points up and down and changing it. You’ve got to get rid of it.”

Asserting that the province’s sales tax should be conceived and administered in B.C., not Ottawa, Vander Zalm said the HST pitches consumers against the corporate sector.

“It has always bothered people that it is a shift from the corporate sector to the consumer,” he said. “It is leading to a great deal of underground activity where people work for cash, which makes honest people dishonest.

“Now we find out it is also a tax grab because they had not been truthful about that either. The government has been less than honest about this throughout all of it.”

Vander Zalm said because the HST is ultimately a consumption tax, it will reduce consumer spending and hurt the economy.

“Businesses will suffer, if not immediately then certainly over the long-term,” he said. “It has happened elsewhere and it is going to happen here.”

However, Penticton and Wine Country Chamber of Commerce president Jason Cox said the organization continues to support the tax.

“It is good for small businesses because it reduces red tape, regulations and the administrative costs of collecting two taxes,” Cox said. “There is also the significant benefit of the input tax credit for certain larger industries.”

And, of course, he approves of the two per-cent reduction.

“It probably recognizes that there are certain services that are taxed now that weren’t before. So the reduction will offset that,” said Cox. “The reduction means that businesses and individuals are going to be able to keep more of the money they earn and make buying decisions with their dollars.”

According to Finance Minister Kevin Falcon, once fully initiated, the two-per-cent reduction to the HST will bring the average B.C. family an overall tax reduction of about $120 a year. If a majority of voters opt to keep the HST, Falcon said that along with the current low-income rebates, an additional $175 transition cheque will go to parents for each child under 18, and to lower-income seniors.

Falcon said with those rebate cheques taken into account, the majority of families will be better off with an 11 per cent HST rate. And once the rate falls to 10 per cent, he said all income brackets will be better off than they were under the old PST/GST regime.

To keep the government’s deficit reduction plan on track, the government will raise the general corporate income tax rate two points to 12 per cent, and delay a small business tax cut scheduled for next year. In addition, tobacco taxes will be raised to offset the HST reduction, so the tax on tobacco would remain the same price as today.