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HST is Just Good Policy May 17, 2010

Posted by admin in : Bill Bennett , comments closed

Today I want to talk about our future here in BC, and what your provincial government is doing to ensure that BC comes out of this global recession as a leader, not only in Canada, but in the world.

More than ever before, governments today must do everything possible to create a climate where business investment is encouraged by low taxes. This isn’t about helping business make more profit – business will take care of itself. This is about govt putting into place the right conditions for business to want to invest in creating new jobs. We saw what happened in the 90’s when govt raised taxes. Investment dried up, jobs dried up and it seemed no one in the world wanted to invest in new jobs in BC.

We should be proud of how far BC has come since 2001 when our govt was first elected. After 120 different tax cuts over the past 9 years, we now have the lowest personal income taxes in Canada and the second lowest overall tax burden in Canada – now ask yourself. Did you know that BC has the second lowest tax cost in Canada?

We’ve been creating good jobs for the last several years and the province is now a confident, positive place compared to the 1990’s. Just last week, financial experts predicted that BC and Ontario would lead Canada in economic growth.

Now — I know that harmonizing the federal GST with our Provincial Sales Tax has been unpopular, but this tax policy is just as important to our future as lowering income taxes was. And it is just another step towards keeping us ahead of the rest of the world.

Don’t take my word for it…the economist, Professor Kevin Milligan from the University of British Columbia, said recently, “HST isn’t a left-right issue, and it isn’t ideological as far as economists are concerned. It is just good policy.” The professor went on to point out that “It isn’t pro-business and anti-consumer. It is the necessary modernization of tax policy. Over time, consumers will benefit.”

You know what’s interesting is that almost every credible economist in Canada is saying we in BC will be better off in the long term because of this new tax policy. These people are not politicians. Unlike Mr. Vanderzam and the NDP, they have no political axe to grind. These experts are the people who study and understand how the economy works.

Now I want to be fair. It’s true that some items like restaurant meals and golf memberships will attract 7% as of July 1st. But it is also true that the basics in life are free of HST, basics like groceries, children’s clothing, prescription drugs, residential rent, all fuels and new houses (up to $550,000). It’s also true that local ranchers, loggers, and small businesses like mine suppliers, appliance and furniture dealers in our EK towns will be more competitive with Alberta.

You may not realize it, but when you buy a retail product or service, the price you pay includes hidden sales tax. That’s the tax that businesses pay on their costs as the product or service is produced. These businesses will no longer pay that hidden sales tax and may be able to reduce consumer prices.

Don’t believe prices will fall? According to a 2007 study by University of Toronto professor Michael Smart, in the Maritimes consumer prices fell after HST was introduced. If you want more proof, there are a number of studies showing that consumer prices are lower in countries that use a value-added sales tax like the HST. It is in the opposite from what you are being told by Mr Vanderzam and the NDP.

It’s the truth that for the most part, the public debate about HST has only been informed by the opponents. Did you know, for example, that a sales tax is known as a consumption tax – and that every tax expert in the world tells us consumption taxes are fairer and smarter than income taxes because with a consumption tax you pay on what you consume, not on what you earn.

What’s true and what’s most important about HST is that we will see thousands of new jobs in our communities and a stronger, more competitive British Columbia.

For the truth about HST, go to: www.gov.bc.ca/hst

Authorized by Bill Bennett, registered sponsor (IPA-2010-002-035) under the Recall & Initiatives Act, 250-919-2255

Disharmony Over a Sales Tax May 3, 2010

Posted by admin in : Bill Bennett , comments closed

Since one focus in the HST debate is on the issue of when it was first considered and decided, I will set out in this column how and when we decided to adopt a harmonized sales tax. While I agree that government in normal circumstances would not announce a major policy within a month following an election, without talking about that policy during the election, the circumstances facing BC last May were anything but “normal.” Think back to a year ago as the world economy sank faster and further than any economist predicted. Both Alberta and Ontario were further off on their deficit predictions than we were. By the time cabinet was sworn in in June, government revenues had dropped like a stone. Should we have known how bad the economy would get? No one in the world predicted it accurately. So in June we realized the Province was at risk of a much larger deficit and I, like the rest of my colleagues, was looking for a way to avoid a much larger debt or raising income taxes.

At this time, the federal government encouraged us to harmonize our provincial sales tax with the federal GST. We learned we’d get $1.6 billion in transition, a real option to avoid adding more to our debt. Still, that financial assistance was not enough for me. I had to be sure that harmonizing the two sales taxes was good for BC in the long term. Would it be good for my two sons and their future? That’s an important test for me.

After hearing that consumer prices generally are lower in countries with a harmonized sales tax, that most credible economists in Canada touted HST as game changer for BC, how HST would create 113,000 new jobs, and how studies in Atlantic Canada proved that consumer prices go down after HST, I agreed to support it.

As for why we acted so quickly, we had until July, 2009 to decide or lose the opportunity to implement with Ontario on July 1st, 2010. It takes at least one year to switch from a provincially administered program to a federally administered sales tax program. I did attempt to communicate the details of HST through MLA columns, interviews, speeches, emails and meetings in my office, but clearly I failed. That, however, does not change how beneficial this will be for BC.

I never talked about HST in my election campaign. Frankly, I never even thought about it. As far as I am aware, it was mentioned once in the campaign by the premier, who said in response to a question, we had no plans to adopt a value added tax. And we did not. My cabinet colleagues and I have put our personal integrity on the line because we believe this is a policy that will help BC compete for jobs and investment in the new, hyper-competitive world we have inherited, following the worst global recession since the 1930s. There was no conspiracy, no lying, just some ordinary people elected to the provincial government trying to deal with a really big challenge. I urge you to get the facts at http://hst.blog.gov.bc.ca/.

[Authorized by Bill Bennett, registered sponsor (IPA-2010-002-035) under the Recall & Initiatives Act, 250-919-2255]