rabble blogs are the personal pages of some of Canada's most insightful progressive activists and commentators. All opinions belong to the writer; however, writers are expected to adhere to our guidelines. We welcome new bloggers -- contact us for details.

So the B.C. HST was defeated. Now what?

Please chip in to support more articles like this. Support rabble.ca for as little as $5 per month!

Yesterday, Elections BC announced the much anticipated HST referendum results. British Columbians have voted to scrap the HST.

The best part about having the results is that now we can move on from the narrow issue of what type of sales tax is better and focus our energies on some of the bigger issues affecting British Columbia.

Since the HST was first announced in the summer of 2009, it has dominated the policy debates in B.C. despite the fact that either way, the tax was going to have only marginal effects on the economy.

Yes, the HST is slightly more economically efficient than the PST. But the difference has been vastly exaggerated by HST proponents, who also refused to acknowledge that the tax is unfair to modest and middle-income families.

This is hardly surprising to readers of this blog who may recall me making this point before:

The HST is certainly an improvement on the PST from an economic efficiency point, but it's a relatively small improvement. I am convinced that the economic benefits touted by the B.C. government and over exaggerated and the significant job growth, in particular, will not materialize.

The reason why HST only has a marginal impact is that taxes play only a marginal role in investment decisions. The main determinant of investment is expectations for future sales, driven in part by the general economic environment. Proximity to markets, the availability of appropriate infrastructure, access to cheap energy, access to a skilled labour force, and political stability are all much more important considerations when a firm is choosing where to set up shop.

The independent panel report, commissioned by the B.C. government, estimated that the actual economic impact we can expect from HST falls far short of the "giant leap" touted by University of Calgary's Prof. Jack Mintz. For example, while Mintz estimated 113,000 new jobs and 8 per cent increase in capital investment by 2020, the independent panel found that we could realistically expect about 24,400 more jobs and 4 per cent increase in business investment over the same period.

While I personally would have preferred to keep a reformed version of the HST, I think it's counterproductive to fret over marginal efficiency differences after the people have spoken.

I'm also glad to see a return to somewhat improved tax fairness. We have witnessed a very large increase in income inequality in B.C. over the past 20 years, and we need to be very careful not to pursue policies that will make this problem worse -- like the HST.

Recent research we've done at the CCPA shows that the HST is only one piece of an inequitable provincial tax system, a system in which the richest 20 per cent of British Columbians pay a lower overall/total effective tax rate than the rest of us. Much more needs to be done to make sure everyone contributes a fair share to fund the services and infrastructure B.C. needs.

Now that the HST debate is over, it would be great to see some of the energy and focus many academics, business and community leaders dedicated to debating the HST be redirected to designing and debating solutions to the real challenges facing B.C.

Our unemployment rate remains high and slightly above the Canadian average at 7.3 per cent. The economic outlook has worsened considerably over the last 6 months, with or without HST. There's a serious risk of our main trade partner, the U.S., going into a second recession, which may push us back into a recession as well. Canadian corporations are not investing, even in the HST provinces. That's because it's not about taxes!

In the meantime, B.C. hasn't had a budget and significant policy changes since Feb 2010. The Feb 2011 budget, tabled in the midst of a party leadership race, was prepared as a "placeholder" budget, padded with unusually large contingencies and forecast allowances to leave the new premier room to implement their own policy priorities. Premier Clark has not tabled a budget yet, deferring the decision until after the HST referendum.

Now we know what we're dealing with, I look forward to debating Premier Clark's policy priorities for moving forward.

British Columbia families will remain vulnerable, burdened with unprecedented levels of household debt -- 160 per cent of income -- the highest in Canada. More and more people are retiring with debt. Our housing market is weakening and bank economists are expecting a "correction" (a.k.a., decline). Unemployment rate remains high, and is projected to stay over 7 per cent for the next few years. Wages for those who are employed are barely keeping up with inflation.

The reality is that without a robust labour market recovery and real increases in household incomes, consumer spending will no longer be able to drive the type of strong economic growth B.C. experienced in the mid-2000s.

We're still struggling with low business investment after years of corporate tax cuts that were supposed to stimulate investment and productivity. It's not for lack of money: private non-financial corporations held $471 billion of cash in the first quarter of 2011. It's also not for lack of competitiveness, or these corporations would have invested abroad instead of keeping the cash.

The problems that climate change poses continue to grow. We need an economic strategy what would invest in people and take bold steps to support a greener economy for our province.

On top of these, persistent poverty and rising income inequality threaten our economic well-being. We spend too much paying for the consequences of poverty instead of addressing the root causes of the problem. We are not fully using the skills and productive potential of those in poverty or those whose lower incomes limit the kind of opportunities available to them. Even the Conference Board of Canada has acknowledged that not just poverty but income inequality "can diminish economic growth" and undermines social cohesion.

These are the types of issues that should be at the centre of the economic debate in B.C., not the best type of sales tax.

This article first appeared in Policy Note.

Thank you for reading this story…

More people are reading rabble.ca than ever and unlike many news organizations, we have never put up a paywall – at rabble we’ve always believed in making our reporting and analysis free to all, while striving to make it sustainable as well. Media isn’t free to produce. rabble’s total budget is likely less than what big corporate media spend on photocopying (we kid you not!) and we do not have any major foundation, sponsor or angel investor. Our main supporters are people and organizations -- like you. This is why we need your help. You are what keep us sustainable.

rabble.ca has staked its existence on you. We live or die on community support -- your support! We get hundreds of thousands of visitors and we believe in them. We believe in you. We believe people will put in what they can for the greater good. We call that sustainable.

So what is the easy answer for us? Depend on a community of visitors who care passionately about media that amplifies the voices of people struggling for change and justice. It really is that simple. When the people who visit rabble care enough to contribute a bit then it works for everyone.

And so we’re asking you if you could make a donation, right now, to help us carry forward on our mission. Make a donation today.


We welcome your comments! rabble.ca embraces a pro-human rights, pro-feminist, anti-racist, queer-positive, anti-imperialist and pro-labour stance, and encourages discussions which develop progressive thought. Our full comment policy can be found here. Learn more about Disqus on rabble.ca and your privacy here. Please keep in mind:


  • Tell the truth and avoid rumours.
  • Add context and background.
  • Report typos and logical fallacies.
  • Be respectful.
  • Respect copyright - link to articles.
  • Stay focused. Bring in-depth commentary to our discussion forum, babble.


  • Use oppressive/offensive language.
  • Libel or defame.
  • Bully or troll.
  • Post spam.
  • Engage trolls. Flag suspect activity instead.