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Friday, October 15, 2010 - The Morning Star A23
News
BRA CLINIC
Only rate cut can save HST
T
oday I reveal the B.C. government’s strategy to do the apparently impossible and win next year’s referendum on the harmonized sales tax. My conclusion is based on observation and deductive reasoning, rather than imaginary leaks from “reliable sources� as anti-HST crusader Bill Vander Zalm recently conjured up. In case you missed Zalm’s latest vision, he declared it in the wee hours before Premier Gordon Campbell gave a speech to local government leaders in Whistler. He predicted Campbell would announce he has Tom Fletcher capitulated to one of Zalm’s many demands and will move up the date of the referendum. Nothing of the sort happened, or will happen. The referendum will take place as specified by legislation on Saturday, Sept. 24, 2011 and we will all pay the 12 per cent HST at least until then. But Zalm’s other prediction, that a rate cut is coming, will eventually come true. (As one of my faithful readers reminded me, even a stopped clock is right twice a day.) One hint of this emerging B.C. Liberal scheme occurred in mid-September. Doing a live interview on Global TV, Campbell mentioned that he is planning a major address to B.C. residents on the HST and the referendum. This means a televised fireside chat, which implies some kind of major announcement. As I write this, no date has been revealed for the proposed TV address. Finance Minister Colin Hansen provided another hint in his latest update on the province’s finances. The finance ministry is still projecting deficits until 2013, but the corporate tax revenues that dropped so dramatically in last year’s financial meltdown are now projected to improve considerably by then. Based on that, Hansen could have steered the province back into the black sooner, but instead he has carved out $2.1 billion of anticipated revenue that is not yet committed to pay for debt or services. “That $2.1 billion in additional revenue could be available for a variety of things, and I think that’s part of what government is looking for feedback on,� Hansen said.
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It could be used to pay down debt, spent on the ever-expanding health care demand, or on “tax relief � of some sort. You might remember when Prime Minister Stephen Harper rolled back the GST from seven to six and then five per cent. Like the price chopper at Wal-Mart, Harper whipped out signs with the new rate emblazoned in big blue numbers. This first appeared on the national news, and was then repeated in campaign ads. Campbell and Hansen have 11 months to execute a similar strategy. B.C.’s HST contract with Ottawa requires the province to keep the rate at 12 per cent until July 1, 2012, after which time the seven per cent provincial share can be changed. But as Hansen indicated, they could announce a rate cut any time they want. Some time before the referendum would be useful. Also yet to be determined is the wording of the referendum question. Elections BC officials have to approve it, but the cabinet will craft the wording. Once the rate cut is promised, the referendum could then offer voters a choice. Keep the HST and see the rate go down in nine months, or vote to scrap it and see the old provincial sales tax come back at seven per cent. Without a rate cut, what would be the incentive for you to take time out of a sunny September Saturday to go down and vote for the HST? With the promise of a rate cut, the HST has a chance of surviving. Tom Fletcher is legislative reporter and columnist for Black Press and BCLocalnews.com.
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