04/18/2013 04:13 EDT | Updated 06/18/2013 05:12 EDT

HST still looms large heading into B.C. election

In between takes on a dark, smoky set inside Vancouver Film Studios in East Vancouver, freelance TV and film producer Wayne Bennett says B.C.'s return to the Provincial Sales Tax is causing major problems in his line of work.

"In trying to keep the pilots that have just shot here, we need to be as competitive as we possibly can," Bennett says.

"Bringing the PST back has put us less competitive once again. We're now seven percent higher on all of those goods and services."

Bennett spoke with CBC News, as a crew was busy putting together the season finale for Arrow, an American action-adventure television series. Bennett says the tax situation in B.C. in making such work less and less affordable.

Bennett says the Harmonized Sales Tax that was charged on costumes, prop rentals, wood and other set construction materials was completely refundable, but now under the PST those items now come with a non-refundable seven per cent tax.

"The first thing they say is 'well you've got to absorb it, you've got to absorb that seven percent into your cost' which is now going to change the quality of the project," Bennett said.

"We're the only province in our country that does not rebate the PST to film production companies because our provincial government doesn't consider that we are a manufacturer."

HST still haunts B.C. Liberals

Nearly two years after B.C.'s HST was defeated in a referendum, the highly contentious tax continues to loom over the B.C. political landscape heading into the 2013 election.

Introduced in 2009 by the B.C. Liberal government as a saviour for business, the contentious tax chased Premier Gordon Campbell from office with historically low approval ratings in 2010, and left Christy Clark and her Finance Minister Kevin Falcon to pick up the pieces.

More than 700,000 signatures were collected by former Premier Bill Vander Zalm and the Stop the HST coalition, which led to a historic peoples' referendum in August 2011 that saw the HST voted out. B.C. reverted to a two-tax system April 1 of this year.

Hamish Telford, who teaches political science at the University of the Fraser Valley, says the way in which the HST was introduced was one of the biggest political mistakes in recent memory.

"I think the HST issue is weighing quite heavily, at least implicitly or indirectly and I think people are still punishing the Liberals for the HST," Telford said. "I don't think they've ever recovered from it, so it was really a fatal blow."

B.C. NDP leader Adrian Dix watched his political fortunes improve as the HST story spiraled out of control for the B.C. Liberals. He recently told the B.C. Construction Association that he would stick with the PST if elected.

"I think probably, in the short term, British Columbians might've had enough sales tax tinkering, so what we want is stability for a while," Dix said.

B.C. Liberal Leader Christy Clark has so far avoided addressing the HST issue except for a short, official message about the return to the Provincial Sales Tax and Goods and Services Tax systems, where she was sure to mention some of the drawbacks.

"It wouldn't be fair if we didn't acknowledge that some folks aren't celebrating the return to the PST. The HST was good for the film industry, good for manufacturing and for many other sectors of our economy," Clark said.

Tax trouble, job loss worry

On the set of Arrow, the heroes creep into an enemy's lair for a dramatic confrontation. After the battle, the lair is dismantled and crew members shuffle set pieces around for the next scene.

Watching them work, Bennett says he worries about job losses that could result from work shifting to Ontario, which has been offering competitive tax rebates to film productions.

According to the Canadian Media Production Association, more than 3,500 jobs in the B.C. film industry were lost between March 2011 and March 2012. Bennett gets choked up, worrying that the PST will contribute to the loss of even more jobs in his industry, an industry that once supported more than 25,000 .

"It's emotional because I've been part of this industry for 23 years in this town. I've been building this industry from the early 90's to what we have today and seen it go through highs and lows," he says.

"But knowing that there's all these people out there that are going to be losing their jobs, myself included, I take that incredibly personally... and that's the hardest part of the job."

In response to the film industry's plight, the Liberals promised to open a B.C. film officer in L.A., while the NDP promised to raise film tax credits to 40 per cent, up from 33 per cent and 35 per cent for foreign and domestic productions.