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June 10, 2011

The HST cannot be fixed

by Jim Sinclair

Jim Sinclair

During the lead up to the 2009 provincial election, instead of campaigning on their plan to introduce the harmonized sales tax, the Liberal government and its MLAs denied they were even considering it. But with the ballots barely counted, the Liberals announced they would proceed with the largest and most unfair tax shift in the province's history.

Incensed at being lied to and having their taxes increased to fund tax cuts for corporations, British Columbians rebelled.

When the dust settled, the people won Round One. A grassroots movement spread across the province, forcing a referendum on the issue.

The people won Round Two in November 2010, when Gordon Campbell was forced to resign as premier.

Today a desperate Liberal party led by newly elected Premier Christy Clark is scrambling to win Round Three by spending millions of taxpayer dollars to convince British Columbians the HST is good for them.

Let's be clear: The HST can't be fixed.

The changes promised by Clark are a cynical attempt to buy British Columbians with their own money and, more importantly, dropping the tax by two points will cause a major revenue crisis leading to more cutbacks of schools, hospitals and government services.

Clark knows this is true--she said so herself.

"We aren't going to be talking about trying to reduce it by a point or two before the referendum. I think people will see that as buying them with their own money," Clark stated on March 21, adding that the province will either have a $1.6-billion bigger deficit or $1.6 billion less to spend on heart operations, special needs teachers, school facilities, and hospital emergency rooms.

She is right on both counts, but she did it anyway. However, the cost to citizens of the HST goes beyond creating bigger deficits or extreme cuts to public services.

This tax is fundamentally flawed because it takes billions of dollars from working families and gives those dollars to B.C.'s largest corporations.

Despite the convoluted question on the referendum, the real choice is between the HST and the provincial sales tax. If British Columbians vote Yes to reject the HST and reintroduce the PST, the government will receive an estimated $6.4 billion from the PST in 2014-15 to pay for public services. Based on historical data, corporations will pay about $2.6 billion and citizens will pay $3.8 billion. Corporations and citizens share the responsibility and the tax will not apply to hundreds of essential purchases.

If British Columbians vote No and keep the HST, the government will receive in 2014-15 about $5.3 billion from the tax, paid entirely by British Columbians and their families. Not only will this create a huge shortfall in revenue (as predicted by the premier) but corporations will pay virtually nothing. This is unfair.

Clark's HST will still have British Columbians paying $1.4 billion more in taxes in 2014-15, but the provincial budget will be more than $1 billion short to pay for public services. Citizens pay more money and get fewer services. This makes no sense.

Yes, Clark announced a "temporary" increase in corporate taxes from 10 per cent to 12 per cent, but that will generate only a small portion of what the HST will save them. And don't forget, since the Liberals took power, the tax on corporate profits has been cut from 16.5 per cent to 10 per cent. The result has been a windfall of nearly $8.5 billion since 2001. Corporate profits also increased 60 per cent during the same period.

Did all those corporate tax cuts create jobs? Unfortunately, no.

Corporations took the money and ran -closing mills and factories at a record pace, leaving us with 28,000 fewer manufacturing jobs today than at the beginning of the Liberal regime.

Don't be fooled by the Liberals or the upside-down question. Vote Yes to scrap the HST, vote Yes to the PST, vote Yes for fair taxes and vote Yes to properly fund public services for all British Columbians.

Jim Sinclair is president of the B.C. Federation of Labour.