Local MLA's Defend HST

MLAs defend harmonized sales tax
Steve MacNaull
08/30/2009 (Okanagan Today)

Kelowna‘s two Liberal MLAs admit the controversial harmonized sales tax (HST) is great policy, but bad politics.

Great policy in that it will create a stronger, more competitive economy and jobs, but bad politics in that it‘s spurred a vehement

debate that makes it tough on the Liberal government of Premier Gordon Campbell.

"It‘s fair to say not everyone is in favour," Kelowna-Mission MLA Steve Thomson told The Okanagan Sunday this weekend.

"It takes a lot of education and explanation for people to understand it. But the more they know how it will create efficiencies,

lower prices and allow business to grow, invest and hire, the more willing they are to accept it."

Kelowna-Lake Country MLA Norm Letnick concurred.

"There‘s concern any time there‘s change of this magnitude," he said.

"It takes education, which is why we‘re responding to a lot of emails and phone calls and explaining why HST is good for B.C."

Thomson and Letnick met with The Okanagan Sunday this weekend after the HST took a trashing in the media on Friday and Saturday.

Both former Social Credit Premier Bill Vander Zalm and NDP Leader Carole James brought their anti-HST campaigns to the Valley, touting it as a business-busting, price-increasing tax grab.

Thomson and Letnick dismissed Vander Zalm‘s and James‘ HST hate as opposition politics.

"To compete in the world, the province has to have a modernized tax system," said Letnick.

"HST makes British Columbia more competitive and more attractive to investment, and that results in a better economy, more hiring and more tax revenue to pay for health care, social services and education."

And this is where all the complicated explanation begins.

The 12-per-cent HST is the result of combining the five per cent federal goods and services tax (GST) and the seven per cent provincial sales tax (PST).

Many products and services already carry both GST and PST, so a harmonized tax is neither here nor there.

However, various goods and services that were previously PST exempt will now carry the HST, such as new homes, restaurant meals, school supplies, cable TV, newspapers and magazines, drycleaning, airline tickets, bicycles and haircuts.

Several products will carry only a five per cent HST, effectively keeping them PST exempt, such as gas and other motor fuels, books, children‘s clothing and footwear, children‘s car seats, diapers and feminine hygiene products.

There will be tax rebates for new home buyers and low-income earners to ease the impact of the HST.

Generally, businesses and industry now pay PST and GST on most materials, supplies and services and get a rebate on GST.

Under HST, businesses and industry will pay the harmonized 12 per cent, but will have an opportunity to get it all back with rebates.

That will reduce the cost of doing business and companies will be able to spend more on growth, hiring, research and development, and attract investment.

It should also mean that companies will be more competitive and pass the savings along to consumers.

"Atlantic Canada has HST, and there was no inflation," Letnick said.

"People are paying more tax, but the price of many goods and services came down, so, for the most part, it‘s neutral."

Letnick expects the same to happen in B.C. People will pay more tax with HST, but prices should come down for a break-even situation.

Vander Zalm and James scoff at the notion that business will pass on the savings to consumers leaving the average British Columbia household to pay about $1,500 more annually.

Letnick disagrees.

"It‘s a transparent tax. It‘s not hidden in goods and services, it‘s added on for the consumer to see," he said.

"Business is very competitive in B.C., and if business is realizing savings and efficiencies they will pass those savings on to customers."

HST is set to be implemented July 1, 2010.