Over the coming weeks and months, there will be much navel-gazing by the B.C. Liberal government and its supporters over the spectacular failure of the Harmonized Sales Tax (HST).
Discussions will continue on political fallout and campaign tactics, and much gnashing of teeth over the terrible way the B.C. Liberals introduced the tax to the public.
Despite all the talk to come, nothing will change the fact that British Columbians voted to defeat the HST and return to the awkward, but familiar, Provincial Sales Tax (PST).
The people have spoken, and the only question that really matters is “now what?”
The over-arching lesson is actually very simple: taxpayers want to be consulted on big decisions.
Government should know better than to spring huge shifts like the HST on the public without discussing the issue with them first.
Direct democracy is a long-standing B.C. value, with our recall legislation, history of referenda, and counter-petition procedures.
Hopefully, Premier Christy Clark’s “Plan B” will include serious dialogue with taxpayers.
Secondly, the HST was sold on the idea it made B.C. attractive to investors, but with a return to the PST, the government is going to have to encourage investment in other ways.
For starters, the provincial government must return to a balanced budget.
B.C. cannot continue to spend more than it takes in without seriously damaging the long-term future of the province.
Before the HST defeat, the provincial government projected a $440-million deficit in 2012/13, with a return to surplus in 2013/14.
That 2012/13 budget number was within striking distance of being balanced and the provincial government should do everything it can to balance the books next year.
Balancing a year ahead of schedule will give business confidence in B.C.’s economic future.
To balance the budget in the post-HST world will take principled, determined leadership from Clark and Finance Minister Kevin Falcon.
During the recent B.C. Liberal leadership campaign, both promised they would balance the books by 2013/14, or “sooner,” in Clark’s case.
They also must resist the temptation to hand out tax dollars to business sectors, such as film, construction and resource industries hurt by the loss of the HST. Corporate welfare just doesn’t work.
Third, there is that small matter of the 300 PST collectors who were transferred to the federal government.
Those collection efficiencies could be lost with a return to the PST.
The government needs to start looking outside of the box.
Are there ways to tweak the collection of the 62-year-old tax to make it easier for small businesses to file their returns?
Could the province outsource PST collection to the federal government, paying Ottawa for operating that system?
This would relieve Victoria of having to hire back hundreds of people to collect the PST, while still giving the public what it voted for – the old PST with its numerous exemptions.
In this post-HST British Columbia, the only thing certain is the uncertainty of how the provincial government will work its way out of the mess it created.
Jordan Bateman is the British Columbia director of the Canadian Taxpayers Federation.
