Monday, December 13, 2010

Can Christy Clark move BC past the HST?

To most that follow British Columbia politics from afar, myself included, it’s more than a little surprising that, with all the drama over the last year or two, the BC Liberals stand a more than decent chance of winning the next election.

There is one big caveat though: the BC Liberals need to get out from under and away from the Harmonized Sales Tax (HST). When she launched her campaign for the BC Liberal leadership last week, Christy Clark presented one scenario that would seem to offer the party the chance to do just that:
“Let us consider putting the proposed referendum question to a truly free vote of the Legislative Assembly. And you know how that question goes: that this house is in favour of extinguishing the harmonized sales tax. Now if this process is successful it would put the HST behind us by March 31st. If it’s successful, we would notify the federal government immediately of our intention to withdraw after the 18 months notice that’s required in the agreement. We would start to negotiate with them to get out earlier than the five-year agreement currently allows. And unfortunately, it would mean going back to the GST and the PST. But we won’t revisit the HST for another five years. It is time for British Columbia to have certainty around this question.”

“After almost a year, the public still hates the HST. And I think we need to face some hard realities here. And that is if this goes to a referendum, a real referendum, the HST will almost certainly fail. We need to take our heads out of the sand on that, and we need to get on with restoring our economy. No one is served by uncertainty.”
Personally, I think sales tax harmonization makes good economic sense and good policy sense. The devil is in the details, and you need to do everything you can to ensure it’s as close to cost-neutral as possible for taxpayers, but it makes sense on all kinds of levels. Less paperwork for businesses, less paperwork for government. And I think undoing it will be a major logistical and procedural headache.

In BC, though, the implementation was clearly bungled. After telling the public harmonization wasn’t on the agenda during the election campaign, just days later suddenly plans to harmonize were announced. It reeked of dishonesty. While it belatedly began to try to sell the public on the merits of the HST, it was never able to get over that initial perception of dishonesty.

In any democracy, you must listen to the will of the citizens, and the people of B.C. seem clear that the HST has got to go. The government has lost the battle on this one, and it’s time to move on. Prolonging this process through the referendum next fall would be pointless, and would only prolong the economic uncertainty while seeing time and resources wasted fighting a lost cause.

Clark hasn’t committed to a course of action on the HST – she plans to consult party members and the public in the weeks ahead – but her outlined option seems the best way to move the province forward and allow it to put the HST behind it. If the legislature votes to kill the HST the referendum becomes unnecessary and the process of unwinding the tax can begin.

I do have one big question though, and that’s what of the $1.6 billion in transition funding that the federal government sent to the province to sweeten the deal? It seems safe to assume the feds are going to want that money back; just saying “keep it” would hardly be fair to the other provinces. I doubt the feds would take a super hard line and demand it all back at once; this would be part of the negotiation but I could see it being paid back over time or applied over time against future transfer payments. Still, it’s going to but a crunch on the province’s budget and necessitate some tough choices that need to be part of the debate.

Anyway, here’s the video from Clark’s leadership campaign launch last week:

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The Rat said...

The underlying assumption being that Christy Clark wins the Liberal leadership. Norman Spector just stated that if Clark wins then the NDP will, in his opinion, form the next government. His reasons make sense. The BC Liberals are that big tent "anyone-but-the-NDP" coalition and Clark is way too much of a Big-L Liberal federally to keep that coalition together. She has too many connections to the BC Rail scandal (with its alleged promises of Federal Liberal payback to Basi for work done) through her brother and her ex-husband. Spector opines that were she to win the Liberal leadership there will be at least two semi-serious conservative parties draining votes.

In the BC Liberal race I am not sure who my money is on, but remembering Clark couldn't raise the support to win the NPS nomination for Vancouver's mayor I doubt she will have the ground support to win.

Tim said...

Personally If I was McGuinty or Charest I would demand the Feds demand the money back all at once from BC to make themselves to look tough to their own provinces voters. Remember Charest has not gotten his HST transition funding to begin with. This could be a real national unity mess with all of the three federalist parties being split by province with the Bloc just pouring gasoline on the fire.

The real problem is the HST will take a longer time to get rid of than many BC voters think like sometime in 2012. This makes easy in someways to pay back the money but will only make voters in BC seethe even more.

Jeff said...

Rat, I have no time or respect for Norman Spector, a tobacco industry lobbyist who went on the radio and called Belinda Stronach a bitch. I refuse to take him seriously.

Whoever wins the BCLib leadership will have to deal with the HST, and I think the scenario outlined is an elegant way to move forward.

Tim, Dalton is one thing. My understanding of Quebec is that their sales tax system was and is completely different, that their claim for compensation has no legal or moral basis, and that it's only being taken semi-seriously in Ottawa has yet another way to try to extort money from Ottawa/pander and buy votes in Quebec.

Tim said...

A couple of more comments,
I think history will show Dalton was the real political playmaker of the HST. Basically up until the day he announced he was introducing it no one else whether in Ottawa or the other provinces thought Ontario would ever have an HST and many like Carole Taylor I would argue bet the farm in terms of their own economic policies on this belief. A lot of the politically "popular" PST exemptions that were lost when BC switched to the HST were put into place by none other than Carol Taylor just a few years ago.

In terms of Quebec their system IS different from what is used is BC, ON, and Atlantic Canada but not totally different. From the standpoint of the consumer their is little difference in terms of what is taxed in Quebec vs Ontario.
Everything in Quebec is made odd by the fact that the province has collected the GST on behalf of the federal government since 1991 an arrangement theoretically open to other provinces that has remained in place over the course of four different Prime Minister's.

The point I'll make is right or wrong the Bloc would like nothing more to get into some type of fight with someone like Bill Vander Zalm. There is "history" between many figures is BC such as Vander Zalm, Moe Sihota, even someone like Norman Spector and the Quebec "establishment" both federalist and soveriegntist.

Kim said...

I hope Christy Clark wins the Liberal leadership in BC too, Jeff. Because she has some explaining to do about her actions in Cabinet in relation to BC Rail, such as why did you recuse herslf from Cabinet and still have inside information on the deal? She has been named as a possible witness in the trial that was suddenly discontinued, just before Gary Collins testified. She has surrounded herself with people implicated in the trial, Patrick Kinsella being one.

The Liberal "Brand" os toast in BC, especially with that Campbell clone at the helm..

Mtn Goat said...

The BC "Liberals" deserve to lose on this issue alone (although there are others...). What I really hate about most governments is how they act as though everyone is too stupid to understand a good logical argument. If a particular course of action is REALLY the best way to go, explain why and do a decent job of selling it (and I'm not talking about spin - I would expect REAL information that can be verified). I live in hope that someday we will get a government that can treat us with some respect. This may be completely unrealistic.... :-)

marie said...

Tell me Rat,Tim, kim and Mtn goat, what will your beloved NDP governments do to repel the HST tax? Your party has never explained how they would end this tax and how they would pay back to the Feds the monies that were used to bribe the libs and Ontario to implement this Harper tax.

As for the deficit in BC, For the past two years saw BC fighting forest fires at the cost of millions of dollars which would have put any government NDP included in the same situation if not worst. WE all know and remember the past ten years of the NDP and their creative accounting to hide their deficit and leave much deficit in Ontario and again right here in BC.

Remember that before you guys go frothing at the mouth with false accusations because those accusations have a way of coming right back to you like a slap on the side of the head.

The Rat said...

Hahaaaaa, ME? NDP? Gawd, that's funny! But seriously, it seems that Federal Liberals are getting way too involved in pushing one of their own on the BC Liberals, The Kinsellas (Warren and Patrick - are they related??) for example. If you really care about avoiding an NDP win then you should also care about keeping the federal fight outside this tent. The Federal Conservatives have already told their organizers to butt out (ironically one of Clark's co-chairs first) and it would behoove the F-Libs to do the same. I can live with a Fed Lib as BC leader just so long as it isn't some kind of coup. If that happens my vote is moving right.