HST carries hidden costs

I am compelled to respond to a letter in the July 1 edition of this paper. The letter was submitted by Joe Sardinha, president of the BC Fruit Growers Association.

I am compelled to respond to a letter in the July 1 edition of this paper. The letter was submitted by Joe Sardinha, president of the BC Fruit Growers Association.

Joe is sure pleased with the HST. Under HST he is able to have the tax he paid for business goods and services refunded to him. So instead of just getting the GST (five per cent) refunded, he also gets the extra seven per cent refunded to him so he is way ahead of the game.

Say in a quarter, a three-month period, he spends $10,000 on farm-related goods and services. The HST is 12 per cent, same as under GST/PST, but now Joe can claim an extra seven per cent input tax credit so may get an extra $700 refunded under the HST scheme.

So Joe’s happy; who wouldn’t be? Joe picked up an extra $700 in a quarter; over a year that’s $2,800. Did Joe sell an extra apple or work an extra hour for this $2,800? No he did nothing. He provided no more goods or services, created no more employment and added no more value to the economy and got $2,800 for nothing.

Where’d this free money come from? It came from you and me, B.C. consumers and taxpayers. Remember that extra seven per cent you paid on a haircut, restaurant meal or on professional services? That extra tax you paid went to Joe, for nothing.

The number that was in vogue last year when the HST was introduced was that it would raise an extra $2 billion from the two million taxpayers in the province. That’s an average of $1,000 per taxpayer going directly into the pockets of businessmen like Joe.

Consumers get nothing for this extra tax and businessmen like Joe do nothing for it.

So Joe’s way ahead of the game under HST at the expense of his friends and neighbours. Or is he? While Joe’s trying to sell more fruit, fruit customers have an average of $1,000 less to spend on goods and services, like fruit. Yes, the $2,800 in this example is small potatoes but we’re talking $2 billion on the provincial level.

Vote Yes before Aug. 5. Spend the extra $1,000 the way you wish, help expand the economy and end the windfall.

Don Rudzcki

 

Oliver