Harmonized Sales Tax debated

The ballots for the HST referendum vote are in the mail.

The ballots for the HST referendum vote are in the mail.

That wouldn’t be such a daunting prospect if Canada Post hadn’t just locked out its employees.

Elections BC has optimistically promised those packages will be to voters once the postal service resumes and reports that no changes to the referendum timetable are being contemplated at this time.

Therefore, it will be soon when a province-wide decision has to be made on whether to keep or scrap the Harmonized Sales Tax. Time has done little to soften the views of those entrenched on either side of the issue.

Walt Cobb, president of the Williams Lake Chamber of Commerce, is committed to the government’s premise that by harmonizing the PST and the GST into the HST (five plus seven equals 12 per cent) and giving businesses the ability to claim the entire amount on items that those businesses will create jobs, invest in B.C. and drive the economy.

The Williams Lake and District and the B.C. chambers of commerce have voiced their support for the HST.

Under the former tax structure, Cobb says business could claim the five per cent GST but not the seven per cent PST; the new structure allows business to claim the 12 per cent.

“I understand the trucking industry — all truck parts, fuel, tires they always used to pay PST and GST now those companies are able to collect that all back,” says Cobb, adding there are other industries that are supportive of the tax.

In general, the restaurant and hotel associations were initially luke warm to the HST as they were concerned that the additional charges on some items would scare customers away. Many have since changed their tune as they recognize traffic has not decreased and that there are savings to be had.

Cobb added that with the return of the HST companies increase their bottom line and therefore may pay more tax through corporate or small business tax streams.

Eric Freeston, regional representative for Fight HST, thinks the situation as described by the government and Cobb is misguided.

“My point is that without there being some obligation on the part of the corporation to take what they’re saving as a result of the HST and put it back into the province there’s nothing that says  they are going to do any of that,” he argues. “They’ll invest where it best suits them.”

The history of countries with low corporate tax rates, for example, with correspondingly high unemployment rates proves his point, Freeston says.

“Corporations are in business for one reason and one reason only and that’s to make a profit. If it’s not profitable to take those savings and reinvest them in B.C. they will go somewhere else to reinvest them. Maybe over to China or India where the wages are far less.”

Freeston says he would be more supportive of the tax if government could create a system that would guarantee businesses would reinvest in British Columbia through creating jobs, raising wages or lowering the cost of products.

Freeston notes there is a five-year agreement with the federal government that stipulates the $1.6 billion given to B.C. from Ottawa must be paid back if the HST is cancelled. If the province keeps the HST for five years that money wouldn’t have to be returned, he says.

The provincial government recently announced that if the public votes to keep the HST the government will reduce it to 10 per cent over two years. It further indicated it would increase the corporate tax rate by two per cent and not reduce the small business tax to zero as had been planned; in addition, it called for the provision of one-time transition cheques of $175 per child issued to families with children under 18 years of age and to low and modest income seniors.

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