HST horror stories fade away

The B.C. government has released its audited public accounts for what Bill Vander Zalm enthusiasts strain to depict as Year One of the Harmonized Sales Tax Apocalypse.

Bill Vander Zalm's dire predictions about the effects of the HST haven't come to pass.

VICTORIA – The B.C. government has released its audited public accounts for what Bill Vander Zalm enthusiasts strain to depict as Year One of the Harmonized Sales Tax Apocalypse.

So let’s survey this allegedly bleak landscape of shuttered hair salons and seniors hoarding pet food, waiting for Belgian bureaucrats to come calling for more.

Retail sales increased 5.3 per cent in 2010. Growth has softened so far this year, but there’s no evidence it’s due to the HST. (Retail sales are mostly goods, which are mostly unaffected.)

B.C.’s economy grew by four per cent, third in Canada behind those new northern tigers Saskatchewan and Newfoundland. We beat Alberta as well as have-not Ontario.

The provincial deficit dropped by nearly a billion dollars, even though spending on government services continued its relentless rise with another billion-dollar increase. That’s four per cent spending growth, the same as the growth rate of the economy. But as usual, two thirds of it is health-care spending, growing closer to twice that fast.

Hair salons? My barber voted No to Vander Zalm. His accounting is simpler, his price is still reasonable and customers aren’t generally prepared to start cutting their own hair.

Restaurant association head Ian Tostenson predicted thousands of restaurants would close because of HST, and then mused about running for premier. Fortunately, we were spared from both of these scenarios.

Finance Minister Kevin Falcon put out some spin about how tight-fisted spending control brought the deficit down from the 10-figure range. Prudence, he called it. Prune juice is more like it.

It was economic growth that paid the bills, with mills and mines opening and consumers spending. Former premier Bill Bennett’s observation still applies: B.C. is a small, open resource economy in a volatile world market.

Commodity markets have strengthened to the point where even the rising Canadian dollar is being overcome. Expansion to Asia is proceeding, assisted by a long-term federal-provincial strategy that the NDP opposed. A skilled labour shortage already exists in the B.C. northeast and is forecast to spread across the province.

The government’s latest labour market survey estimates that B.C. will be in a labour shortage by 2016, and there will be one million job openings by 2020. One third of these will come from economic growth, two thirds from retiring baby boomers. Unlike next year’s HST revenues, this prediction is relatively easy to make with precision.

Job growth does depend, however, on a competitive tax environment, with competition from Ontario and elsewhere.

The public accounts also confirm what we found out last fall, that HST revenues have run ahead of expectations. HST haters like to claim the tax was promised to be revenue neutral. That finance ministry estimate was only for the first year, and it proved pessimistic. As with gasoline prices, external forces drown out B.C. tax adjustments in the short term.

Currently it looks as if going back to the old provincial sales tax will cost the treasury about $600 million in revenue in each of the next few years. HST rate cuts are made up by economic growth.

Or we can return to a 60-year-old retail sales tax developed for a post-war, pre-service economy, and continue a B.C. political debate that revolves around 30-year-old socialist ideology. The deficit will immediately jump back up to the 10-digit range.

So if your HST referendum envelope is still in the bottom of your recycling bin, you might consider fishing it out and casting a No vote. They have to be delivered to Elections BC by Aug. 5.

Tom Fletcher is legislative reporter and columnist for Black Press and BCLocalnews.com

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