BUSINESS
08/21/2011 06:34 EDT | Updated 10/21/2011 05:12 EDT

HST vote result due this week

Flickr: roland

British Columbians will get to know the outcome of the HST drama that has been holding the province in its grip for the past two years by the end of this week.

But what the sequel to the cliffhanger that has already cost a longtime premier his job will be isn't clear.

Supporters and opponents of the harmonized sales tax agree the results of the mail-in referendum vote are too close to call.

Despite the looming possibility that the provincial government will have to shift gears dramatically if the tax is dumped, no one in government is giving away any details about what 'Plan B' would look like.

Elections BC spokesman Don Main is sticking with the prediction made earlier this month that the vote count will be made public "on or about August 25."

About 1.6 million voters, or about 52 per cent of registered B.C. voters, cast ballots in the HST referendum, a campaign prompted by a successful and massive public petition. The petition used the province's unique democracy laws to force the vote on the tax introduced by the B.C. Liberal government in July 2009.

A majority 'Yes' vote means B.C. gets rid of the 12-per-cent tax, which has been law since July 2010.

A majority 'No' vote ensures the controversial value-added tax stays and would be reduced to 10 per cent within three years if British Columbians elect the Liberals for a fourth consecutive term.

Liberals and business groups supporting the HST aren't willing to admit, or at least publicly discuss, that they have strategies in the works in case voters reject the tax.

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.

No comment from Falcon

Finance Minister Kevin Falcon was on vacation Friday and officials in the ministry said he won't be available to discuss future government moves with regards to the HST until the vote results are released.

Instead, the ministry released a written statement attributed to Falcon, which said:

"We will not be speculating about specific implications regarding the upcoming referendum result.

"Once the decision has been announced by Elections BC, we will speak directly to British Columbians about our plan to move forward."

Officials in Falcon's ministry said the closest they would come to outlining the government's plan if the HST is dumped is pointing to scenarios the government released last May when it announced a two-per-cent HST cut.

Falcon has said in the past that the B.C. government is looking at a $3 billion budget hit, which includes repaying Ottawa the incentive money it forwarded to implement the tax if voters get rid of the combined tax.

Deficit impacts

The net impact of a dropped HST would be an immediate increase in next year's projected budget deficit to $2.56 billion from $925 million.

That would inevitably mean cuts to government programs and a prolonged period of provincial deficits.

The deficit increase includes the $1.6 billion the province would have to repay Ottawa for switching to the HST and $42 million in debt interest costs.

At a recent chamber of commerce luncheon in Victoria, Falcon told businesspeople that the HST doesn't benefit all businesses, but more of the world's governments are moving to adopt "value-added" taxes and the province should move that way, too.

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 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 stays at 12 per cent.

Phil Hochstein, president of the Independent Contractors and Business Association of B.C., said he's banking on the HST surviving the referendum vote.

"I don't think we have a 'Plan B' at the moment," Hochstein said.

"We're anticipating being successful and we'll see what happens."

Hochstein forecasts political and business chaos if the HST is dropped by voters.

"If it fails and we have to go back, then it's two years of angst and negotiations with the federal government and rebuilding a government bureaucracy and administrative system to collect the provincial sales tax and it's a much more tumultuous period," he said.

The Opposition New Democrats, who campaigned get rid of the HST, said the ongoing uncertainty as a result of the issue has hurt the province.

Finance critic Bruce Ralston said an examination of 40 speeches by Premier Christy Clark over the last several months show the Liberals don't have an economic strategy because they have relied entirely on the HST.

He said Clark's announcement last week of a plan to create more jobs is proof.

"Premier Clark's Seinfeld-style announcement. . . showed the lack of a plan for jobs, even though she claims to have spent a lot of time thinking about how important jobs are during her summer vacation," Ralston said.