KELOWNA (CUP)—Controversy over the proposed introduction of the harmonised sales tax (HST) in British Columbia has led to strong responses from political leaders and business owners.
The Liberal government, re-elected in May, announced their intentions on July 23 to harmonise the Provincial Sales Tax (PST) with the federal Goods and Services Tax (GST) as of July 1, 2010.
On the campaign front in May, the Liberals told restaurant and homeowners associations that they were not contemplating the HST as a part of their campaign platform.
“What changed for us, and became evident in that third week of May,” BC Minister of Finance Colin Hansen told the Canadian University Press (CUP), “was that the federal government was prepared to show flexibility that they did not show before.”
BC’s HST will be at 12 per cent, a percentage point lower than the HST rate Ontario is scheduled to launch on the same day. Additionally, the federal government offered $1.6 billion in transitional money to BC to supplement the improvement this change will make to the competition among businesses in Canada.
That funding announcement came in the midst of rapidly increasing deficits. The September 1 provincial budget provided for a $2.8 billion dollar deficit, rather than the $495 million deficit projected in February before the election.
Controversy stems from the fact that the HST will apply to some items that are currently only taxed five per cent at the point of sale.
“Generally speaking, the PST applied to goods….It did not apply generally to services,” Hansen said. “Under the HST, it will apply generally to goods and services.”
Bill Waring, president of De Dutch Pannekoek Restaurants Inc, says that this is a problem for his business.
“At the moment, the restaurant industry is exempt from collecting provincial sales tax. I would like that to continue.” Taxes on the food portion of a restaurant meal will rise from 5 per cent to 12 per cent after the implementation of HST.
Waring has been outspoken in his criticisms of the tax, but he indicates that this debate may have a lot to do with personal interests.
“To make it clear, I congratulate the segment of the business community that has lobbied for this and got it, because clearly it is in their best interests to do it,” he said. “My issue really has to do with it impacting me as a result of what’s happening or how it will impact my customers.”
Opposition to the tax, however, has come not only from the economic arena, but the political one as well. Former Premier Bill Vander Zalm is fuming about its unfairness.
“The biggest problem with HST is that you’e taking it from the person with the lunch bucket, the person that’s retired with limited income, and giving it to big industry,” he told CUP.
The NDP has been campaigning around the province sending the same message—but, says Vander Zalm, “they [made the announcement] when the Braewood commission on the use of tasers was also being announced, and that’s where all the attention went.”
Waring agreed that it is unfair, but is more concerned about its effect on his business.
“It seems to me that government should be working to benefit all of the members of the constituencies, and in this case, they’e not,” Waring claimed. “They’e benefiting a small number. They’e saying trust us, this is going to help you in the long run,’ and lined up behind them they have a number of business people that say ‘yes, yes, yes.’ They all have their self-interests at this point, and to be clear, I’m looking after my self-interest as well, and I’m making no apologies for that.”
Waring also brushed aside the idea that HST critics like himself and the NDP are forming an unlikely coalition around Vander Zalm, who is holding a public rally in Vancouver on September 19.
“I’m not sure how much we’e coalescing, but we probably have similar opinions,” he said. “I have no intention on getting involved with the ex-premier on this or any other issue.”
Hansen, for his part, believes that eliminating what he calls a complex system of embedded PST and GST will save businesses money and help keep the province competitive, and that critics like Vander Zalm are just jumping on the bandwagon.
“People have asked me, am I surprised at some of the polls that have come out? It is good public policy, it is good economic policy, but it is tough politics because quite frankly, people don’t like taxes,” he said. “The leading economists and the leading think tanks tell us this shift to HST is the most important thing we can do as a province to stimulate the economy and generate jobs.”
Waring doesn’t believe it. “It’s rhetoric, as far as I’m concerned,” he said. “I live in the real world and my feet are out there on the ground every single day, and I’m out there trying to make a living in my business.”
Vander Zalm isn’t going to give up either.
“We’e going to keep this before the people, because the government thought they could bury it and get away with it and people would forget—and it was almost successful, but not quite,” he said. “They thought they could get away with it, but they’e not. We’re going to keep fighting the HST.”

[Ubyssey.ca]