The campaign to save the HST is rather shameless, not to mention bad public policy. We won't, as HST spin masters would have it, pay less tax with the new and improved HST. The amount of tax we collectively pay depends on the amount of services and support government provides - total government spending- not the manner in which taxes are paid.
True, different types of taxes affect people differently and the fairness of different tax policies is a valid concern. But don't tell me we are going to pay less overall by instituting one tax as opposed another. It is a silly reason to support of the HST in the same way that it was a silly reason to support the ‘revenue-negative' carbon tax.
In any case, by almost any sensible measure we need more, not less public investment. So let's not try to figure out how to pay less; we need to think about the most efficient and equitable ways to pay more.
Which brings me to the HST vs PST quandary we currently face. There is no question that the manner in which the HST was introduced was duplicitous, and that there is little reason to trust the government's latest plan to to make it more equitable between households and business in the future. But those are reasons for voting for a change in government, not to restore the PST.
The fact is, despite all the good arguments of my old school mate David Schreck, the PST is an inefficient tax. There is the obvious duplication of tax collection and payment with the our very own PST. And there is the more subtle, but still significant problem of charging sales tax on goods whose prices already include sales tax paid on the B.C. materials they use -- an economically distorting tax on tax.
There is as well the impact of the narrower tax base of the PST as compared to the HST. Whatever is taxed has to be taxed a lot more to make up for everything that isn't taxed, without any consistent reasoning or principle determining why some things we consume should be taxed and others should not. I like to go out to eat, but I can't understand why government should treat that more favourably than buying tools or clothes.
Don't get me wrong. I'm no great lover of the HST. If someone wants to implement higher energy prices, natural resource royalties, congestion charges, solid waste fees -- a serious effort to capture resource rents and to tax environmental and social costs -- I am all for it. There are better alternatives. But going back to the PST is not one of them.
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So I can't see voting ‘yes' (meaning ‘no') in the upcoming referendum. And that is not because of the silly ‘lower tax' argument being made in defence of the HST. It is because the HST is better than what we are being asked to go back to.
Marvin, all that you say is true. But to me, the difference between the two taxes is relatively minor and is far less significant, in relation to the needs and interests of the people of BC, than the opportunity to shove a stick into the spokes of the BC Liberal government, just as they are trying to gain enough momentum to call an early election. A "yes" (aka no to HST) result in the referendum would be a serious setback to their fortunes. Working and low-income people need to get rid of the Clark government. It's too good an opportunity to pass up.
If you're really interested in equitable and efficient means of paying more tax, you can't do better than the income tax.
Consumption taxes require so many kludges to try and counter their regressive nature (that ultimately fail to do so completely) that it makes no sense to see them as a means of equitably increasing government revenue.
The deciding factor for me is that if the majority of British Columbians and the B.C. government accept the HST then they have accepted a onetime $2.6m bribe to accept funding from the federal government in the source of federal transfer payments.
The PST that the HST replaces is a tax that the B.C. provincial government raises itself by itself for itself.
Anything the British Columbia government wishes to do like improve communications infrastructure, build bridges on provincial hiways and roads, service or buy more ferries, fund healthcare, etc., these and all programs like these that are funded by the provincial government, B.C. will be at the tender mercy of the federal government and how much money they transfer to the province.
This will result in a number of scenarios.
1. The B.C. government will have to prioritize its spending. Widening and improving roads and building new bridges may take precedence over healthcare or vica versa, for example.
2. The B.C. government may further or entirely privatize provincial road construction, running of B.C. Ferries and the running and providing of healthcare and healthcare services.
3. The HST may have to be increased or expanded to other items to make up the shortfall.
4. The B.C. government may have to do things like hold bake, cookie and carwash sales to raise the money where before B.C. raised its own tax revenue.
How stupid is this?
