VICTORIA – My feedback on the harmonized sales tax debate is running hotter as taxpayers await Premier Christy Clark’s “bold” changes to the tax, due to be revealed any day.
In response to several angry readers, I will restate what I had hoped was obvious by now. All but the poorest consumers (myself included) are paying more tax under the HST than they were under the old provincial sales tax. The richest pay by far the most.
The “embedded” PST has been removed from many products, but evidence isn’t yet clear that this is being passed on to consumers, as economists predict. What is clear is that businesses are benefiting. What is still in dispute is what businesses are helped most.
Doug Donaldson, the NDP MLA for Stikine, objected to my statement last week that he was wrong about the HST beneficiaries being “Liberal donor corporations.” So again I will state the obvious, that forest, mining and other resource companies donate to the B.C. Liberals. (The NDP is on record as wanting to increase corporate income and capital taxes.)
Donaldson goes wrong when he specifies “corporations” rather than small business. Consider the forest industry.
Over the past 20 years the entire B.C. industry contracted out its harvesting operations, based on the well-tested principle that independent contractors are more efficient than inflexible, strike-prone major forest operators. That has been a painful process, not just economically but in terms of worker safety. But it’s exactly the kind of global-market shift that is being imposed on B.C.
As mentioned last week, you may not like that, but you shouldn’t believe those who try to pretend it’s not happening. And those big “corporations” had their major machinery and equipment exempted from sales tax long before the HST. It’s the small contractors who are now getting the benefit.
NDP finance critic Bruce Ralston notes that anyone can incorporate for tax purposes. It’s common for doctors, dentists and lawyers such as Ralston. But is it practical to expect the owner-operator of a logging truck to do that?
The independent truck drivers I’ve met are more concerned about paying their next fuel bill than hiring a lawyer to incorporate them. Increasingly it is immigrants who drive trucks, out-working the resident population to get ahead as immigrants have always had to do.
Speaking of immigrants, the situation in Vancouver real estate is worth noting. One of the things HST was supposed to severely depress was high-end new housing, now subject to the seven-per-cent provincial portion of HST once the prices exceeds $525,000.
What has happened? Offshore buyers are pushing costs out of the reach of B.C. residents who aspire to an ocean view. In many cases these are “satellite families,” taking advantage of our clean, stable, safe jurisdiction on the Pacific Rim. Mum may drive the kids to private school in a Range Rover, but the family reports little or no Canadian income. The only way these residents will pay a share is through consumption taxes.
I have also argued that migration of retirees will dominate B.C.’s population growth in the coming years. This is another group that reports less income but has significant consumption.
A recent BC Stats study shows that I overstated the impact of retirees. Since 1961, only seven per cent of migrants to B.C. have been 65 or older.
Younger people are coming here to work, and increasingly they will be self-employed or in small business.
The NDP supports lowering small business income tax to zero. They should also support the HST.
Tom Fletcher is legislative reporter and columnist for Black Press and BCLocalnews.com