08/01/2011 07:00 EDT | Updated 10/01/2011 05:12 EDT

B.C.'s two-year HST political saga nearing final vote

VICTORIA - People who want to voice their opinion of the HST have only until the end of this week to make themselves heard by ensuring Elections BC has their referendum ballot.

One of the longest-running political issues in British Columbia history reaches a significant milestone on Aug. 5 with the deadline for ballots in the referendum to dump or keep the controversial harmonized sales tax.

The HST has dominated the political agenda for more than two years and it's likely to be the major battleground in the next B.C. election.

Results of the mail-in referendum vote are expected in late August or early September.

British Columbians are officially scheduled to go to the polls in May 2013 under the province's fixed election date law, but Premier Christy Clark has been musing about getting a mandate of her own since her election as Liberal leader last February, and that could mean an election as early as this fall.

Provincewide anger over the HST is barely simmering now, but the outcome of the results will have far-reaching results.

A win means the government will take the potentially costly move to reduce the tax to 10 per cent in 2014, but a loss means having to repay Ottawa the $1.6 billion it gave the province to implement the tax.

Clark, the former Liberal who left politics to devote more time to motherhood and ended up a popular radio hotline host, inherited the HST from former premier Gordon Campbell, who quit during his third term when anger over the HST was at its height and his approval ratings plunged to single digits.

Clark has spent her first five months in office trying to put a smiling face on her government, but the constant, dour frown of the HST makes that difficult.

Retired University of Victoria political science Prof. Norman Ruff said the HST destroyed Campbell's political career, and the Liberals under Clark have been trying to decontaminate themselves ever since.

But Ruff said the stain left by the tax is deep and engrained in British Columbians.

"Clearly, they're hoping the HST survives the referendum vote," he said. "If they lose, the situation becomes even more serious for them and the prospects for their re-election."

Finance Minister Kevin Falcon has spent the better part of the last year attempting to soothe public anger over the tax, admitting the government did a poor job introducing the HST.

Falcon has used a calm, business-like approach to dispel what he calls misconceptions about sweet deals for business while picking the pockets of taxpayers.

At a recent chamber of commerce luncheon in Victoria, Falcon fielded questions from business people concerned about tourists with less money in their pockets.

"I have never pretended that every single business will benefit equally," he said. "The vast majority of businesses, small businesses, large businesses, clearly benefit from the HST."

Falcon said nine of the 10 fastest growing economies in the world use HST-type taxes and there are 140 jurisdictions worldwide currently using the model.

No jurisdiction anywhere is contemplating introducing a retail sales tax system that British Columbians are reconsidering in the referendum, he said.

The 12-per-cent HST combines the five-per-cent federal Goods and Services Tax with the former seven-per-cent B.C. provincial sales tax.

The Liberals have promised to drop the HST to 10 per cent by 2014 if British Columbians vote to keep the HST in the referendum. The government has said the drop will save taxpayers about $120 per year, as opposed to forcing them to pay $350 extra in taxes if the HST stayed at 12 per cent.

Falcon said the B.C. government is looking at a $3 billion budget hit, which includes repaying Ottawa, if voters get rid of the HST.

Falcon recently published an open letter to British Columbians saying the HST is the right tax for the province and voters should consider keeping the tax as a good business decision as opposed to an emotional reaction to the government's failure to introduce the tax properly.

"For almost every sector — whether it's the film industry, tourism, forestry, mining or agriculture — the HST is a better tax because it is simpler and more progressive, which means these companies save money and can add jobs." said Falcon's open letter.

But Falcon admits his calm, business-facts approach to selling the HST is being tested by the constant finger-pointing concerns being raised by HST opponents, including former premier Bill Vander Zalm and Bill Tieleman, a one-time aide to former B.C. New Democrat premier Glen Clark.

"I don't even know anymore what to say about the efforts that Tieleman and Vander Zalm will go through to try and generate publicity for themselves," he said. "Forgive me if I'm a little bit skeptical, even frankly about their interpretation of how this process unfolds."

Vander Zalm and Tieleman raised concerns last week, saying there is secrecy about the process because all the ballots are being kept in an undisclosed location before they are counted in front of scrutineers.

Officials at Elections BC, an independent agency funded by government, dismissed the secrecy concerns, saying the vote counting process is as open to official observers, including Vander Zalm and Tieleman, as it would be on the night of a provincial election.

Vander Zalm's Fight-HST campaign mobilized a massive grassroots campaign last year that resulted in more than 500,000 people signing a petition to repeal the HST. The petition results activated B.C.'s direct democracy laws that permit referendums and recalls of politicians.

"If we lose fair and square, we lose fair and square," said Vander Zalm. "If we win, the government has to deal with extinguishing the HST."

Opposition New Democrat Leader Adrian Dix said he will spend the final days of the referendum campaign urging people to vote and urging them to vote Yes to get rid of the tax.