OK, the HST is gone. Now it’s time to get things back on track.
For more than two years, things have been a mess in B.C.
Politically, we’ve had a citizens’ revolt, the resurrection of Bill Vander Zalm and the ouster of Gordon Campbell.
Economically, we’ve been a mess. Tax policy has been made up on the fly. Campbell promised a 15-per-cent income tax cut, then the government reneged once he quit. The government cut corporate taxes, then Premier Christy Clark said she would increase them again if the HST survived. The Liberals said the HST was not in the plans during the 2009 campaign, introduced it, then watched as it grew increasingly doomed.
All at a time when the economy was already fragile.
Businesses, and individuals, adapt to different tax regimes. But they like certainty. If a corporation is going to invest $100 million in a mill, it wants to know that the taxes won’t suddenly change once the doors are open. If a family is going to spend $10,000 on a new roof, they want to know that waiting for the result of the HST referendum wouldn’t save them $400.
That’s been missing.
And, despite the referendum result, certainty is still missing.
No one knows what happens next.
Finance Minister Kevin Falcon has said the government doesn’t have to bring back the old provincial sales tax, with all the exemptions were in place in 2009. He said the tax could be more like the HST, applied to more goods and services, to increase revenue.
Health Minister MIke de Jong has taken the opposite view. He told Mike Smyth of the Vancouver Province that the petition and referendum questions were clear.
“The choice is the HST as it exists today, or the PST as it existed previously,” he said. “If people opt to get rid of the HST and go back to the PST as it existed in 2009, that’s what the government is going to do.”
De Jong is right. But until the government is clear, the tax uncertainty continues. And so does the risk of another taxpayer revolt, if the government tries to weasel on the referendum result.
Falcon appears, in the aftermath of the vote, to accepted that reality.
That’s just one issue in the post-referendum world.
Falcon has said that rejecting the HST would mean big changes for B.C.’s budget.
It’s time for the government to lay those out for British Columbians.
The defeat of the HST means about $360 million less in annual revenue, according to the analysis by the government’s independent panel. The federal government’s $1.6 billion incentive payment to encourage the province to adopt the tax has to be repaid over time. The PST tax office has to be restored.
So what’s the plan? Will taxes rise, and if so, who will pay more? Will spending be cut, and who will lose out? Or will the government borrow more to repay the federal government, and accept the interest costs?
They are all legitimate responses. What’s needed is a clear, multi-year government plan, so everyone, businesses and investors particularly, know the rules.
And so voters can decide whether it makes sense.
A serious government would be setting out its plan, accepting the public’ verdict.
Instead, it seems the Clark government is still considering a quick election.
That’s just irresponsible. There is no clear election issue. The Clark government hasn’t set out an agenda, or a prudent budget based on the HST referendum results.
Clark has a chance to set out her government’s plans and priorities, supported by a new budget in February. That would let voters make an informed choice.
It’s been a more than two years of stumbling government and slapdash fiscal policy in British Columbia.
Clark needs to show what alternative her government has to offer before Britisn Columbians go to the polls.
Footnote: The margin voting to reject the HST could spell the end of fall election speculation. Given the depth of public rejection of a key Liberal policy, and Premier Christy Clark’s decision to throw her support behind the tax, an election call now would be highly risky.