Top 10 BC Liberal Myths about the HST:
MYTH #1 – The HST legislation cannot be undone
FALSE: Page 11, Section 42 of the Comprehensive Integrated Tax Coordination Agreement (CITCA) that BC signed with Ottawa to create the HST says: “The terms and conditions of this Agreement will continue in full force and effect, in accordance with and subject to the provisions of this Part, until the date that is specified by a Party in written notice that is delivered to the other Party setting out the Party’s desire to terminate this Agreement.”
Other provinces have adopted and later repealed the HST. Saskatchewan adopted the HST back in 1989, and two years later, after an election, the HST was repealed by the new government.
MYTH #2 – The HST is a streamlined, more efficient tax
FALSE: The CITCA has 16 pages of formula definitions that require mathematical experts to compute how the tax sharing is to be calculated, with formulas such as:
There are hundreds of other formulas like this outlined in the revenue sharing agreement.
A simple modification of the PST to provide input tax credits to business, with a reduction to 3 or 4% to compensate for the expanded tax base would be a win-win-win: Truly revenue neutral for government, business wouldn’t pay, and it would be virtually the same cost for consumers as the current PST at 7%. BC could also collect the federal government portion, as Quebec does, to create a single tax form while maintaining provincial control of taxation.
MYTH # 3 – BC must adopt the HST to compete with Ontario
FALSE: BC’s closest trading partners are Alberta, the United States, and Asia, where there is no HST. Ontario is primarily a manufacturing province, whereas BC is a resource based province which does not directly compete with Ontario for the same goods and services.
MYTH # 4 – HST rebates will offset the extra costs to seniors
FALSE: Current rebates for GST are applied as a % of the tax. The HST rebates will also be applied as a % of the tax, but with a much larger gross tax amount (12% on HST vs. 5% on GST) it means a greater portion of senior’s incomes and pensions will be required to pay the difference between the rebates and the larger amount of overall tax paid. If you are a senior requiring home care or outside care, it will be even higher.
MYTH #5 – HST does not apply to new home construction under $520K
FALSE: All new home construction has HST applied, with some partial rebates to off-set the extra tax up to $520K, where the full HST is then applied. For example: A new home or apartment costing $300K will have an extra $6,000 of HST applied to the purchase price – approximately the cost of purchasing new appliances or furniture for that same home.
MYTH #6 – HST will not affect rents/strata fees
FALSE: Although HST will not be directly applied to home rents or strata fees, apartment buildings and home owners who rent to others will have to pay an extra 7% on all goods and services required to upkeep, maintain, renovate and manage the buildings they rent out. These ‘hidden HST costs’ will have to be applied to rents, and consumers will pay again.
MYTH #7 – HST is a federal decision
FALSE: The federal government has said adoption of the HST is a provincial decision, and the provincial government has said it is a federal initiative. While both of them are punting that political football around, British Columbians are only being kicked in the head. The truth is, according to Section 92 of the Constitution Act 1867, provincial taxes are the exclusive jurisdiction of the provincial legislature. To change that requires a constitutional amendment, so both governments are at fault for not obeying the laws they themselves made.
MYTH #8 – HST will create jobs
FALSE: Small business is the largest generator of jobs in British Columbia, employing nearly 8 in 10 British Columbians. Almost every small business, from restaurant owners, to construction companies, to tourist businesses, to retailers have said the HST will cost them business, forcing them to lay off staff. One home builder in Squamish recently cancelled an $18M housing development, laying off 100 workers directly due to the HST.
The big resource companies will not hire new workers because of a refund cheque from the government. They will expand and create jobs when the world demand for forest products, oil and gas, or minerals increases. In the north and along the Alberta border, where business must compete directly with a 5% GST, it will kill business and destroy jobs by the thousands. The restaurant industry estimates it will lose over $400M in revenues per year, and result in thousands of layoffs.
MYTH #9 – HST will lower prices
FALSE: This one almost defies comment. Anytime you add 7% to the cost of anything the price goes up. The argument the government tries to make is that because business will have a rebate on previously paid PST, they can pass these savings on to consumers in reduced prices. What they don’t say is that many businesses are already PST exempt, and therefore are not adding that cost to goods presently. But when it was pointed out the HST would save government liquor stores approximately 3% on the price of liquor, the government said it would not lower prices to compensate for the savings. They want everyone else to do it – but not them. Doesn’t that just take the cake?
MYTH #10 – HST is revenue neutral
FALSE: First the government said the HST was revenue neutral. Then they said the money raised would go to health care. Then they said there would be a first year overall loss of -$131M to implement the tax. Then they said without HST there would be cuts to health care and services. Their desperate attempt to avoid telling the truth – that the HST is a tax grab by Victoria to pay for extreme mismanagement of the economy, and a power grab by Ottawa to control BC’s tax authority, is being seen by more and more people for what it is – a dictatorial government that has lost touch with the people it was elected to serve.
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