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Breaking Up With The HST: It's Definitely You, Not Us

Posted: 01/30/2013 2:33 pm

Like the proverbial girlfriend we just can't seem to get over, the Harmonized Sales Tax (HST) has dominated British Columbia's collective political and economic mind for the past four years.

We curse our old college buddy Gordon Campbell for introducing us to her in the first place. He rushed us into a blind date with the HST because he saw B.C.'s budget numbers going south, but we should have taken the time to get to know her better. What makes her tick? What could she bring to a relationship? Gordon moved on — with a quick kick from us — but the HST stayed behind.

Nearly every political and economic debate in this province over the past few years has its roots in the HST. The Liberal leadership race started after Campbell resigned over his handling of the HST. The film industry wants a bigger subsidy, in part because Ontario's HST gives them an advantage over B.C. Unemployment numbers, investment climate, consumer confidence, opinion polls and taxpayer burden have all been affected by the HST.

A couple of summers ago, our wild uncle Bill Vander Zalm convinced us to ask 1.6 million of our closest friends for their opinion on whether it was time to split up. Nearly 55 per cent of them said it was time to kick her to the curb, so we did.

But breakups are never easy, and this one has dragged on too long — to the detriment of B.C.'s economy. It won't officially be over until 11:59 p.m., March 31.

Meanwhile, the fifth provincial budget of this relationship will be unveiled on Feb.19.

Campbell swore up and down before the spring 2009 election that the 2009-10 budget deficit was going to be $495 million. As revenues plunged and spending grew, a mini-budget that fall showed how wrong he was, and the deficit ended up being $1.8 billion.

In 2010-11, the HST transition payment from the federal government came in, and an expected $1.7 billion deficit was cut to $309 million — close to balance. But 2011-12 saw that HST transition money paid back, meaning the expected deficit grew to $1.84 billion, doubling from its initial projections. Another $1.47 billion deficit looks to be in the cards for 2012-13, up half a billion dollars from the budget day projection.

Provincial budgets have been on a roller coaster of deficits, due in no small part to HST policy shifting so radically, so quickly.

All of these HST dips and turns make grading next month's B.C. budget — the document on which the provincial Liberals will run for re-election — very difficult. How will we know it's balanced, as they promise? Will revenue projections be on the mark — given that no one is really sure what the impact of our final HST breakup will be? Or can we expect a modest surplus to be declared on budget day, only to see B.C. sink into the hole shortly thereafter?

No matter what, on April 1, the HST finally moves on, and we can get on with our lives. Sure, she'll be mentioned from time to time and we'll no doubt stumble across her once in a while on Facebook or Twitter, but we're finally breaking up, and we are never, ever, ever getting back together.

Well, for a few years anyway. That's the thing with exes: they can pop up at the oddest times.

 

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Arnold Gill
Astrophysicist, college instructor, programmer
11:43 AM on 01/31/2013
Getting rid of the HST is one of the stupidest things that came out of populist voting. While I agree that the manner it was brought in was disgusting, and the government deserved to be slammed hard for the manner in which it was done, but talk to any business around, and the HST will make them more profitable by reducing costs. As for the naysayers, I can almost guarantee that none of them own or run a business!
11:26 PM on 01/30/2013
I can't help notice you fail to mention that we were told on a number of occasions the HST is revenue neutral but alas it was another liberal lie. Since the HST hasn't disappeared yet and the loss of film productions has been well under way, your correlation of Ontario's HST advantage makes no sense at all. The HST has nothing to do with creating a problematic balancing of the budget as it was only a mechanism to transfer tax from business to individual taxpayers. Of course you will never admit your pals are just plain incompetent.