February 16, 2011
In too deep with the HST
If it hasn’t sunk in yet, the B.C. Liberals are giving some very broad hints that we’d better vote in favour of the HST in the upcoming referendum.
The budget handed down was indeed unremarkable when you look at it in terms of spending. It’s the revenue side where things get interesting. Money from natural resources and crown corporations — normally B.C’s bread and butter — was below targets set out by the government. So how is it that Finance Minister Colin Hansen was able to build in a billion-dollar cushion? It turns out that revenue collected so far from the HST was higher than expected.
The message, then, is that without the Hated Sales Tax, this province would be on the ropes, financially speaking. In addition to revenue from the tax itself, B.C. has received $1.6 from Ottawa just for making the switch. Plus, switching back would cost another $300,000. Add it all up, we’re looking at having to make up a shortfall of more than $2 billion if the HST goes down in the referendum.
I generally support the HST because third-party economists, with no axe to grind, have said it will be a good thing. In the end, though, it may not be the reasoned arguments of those in the know who will persuade British Columbians to vote yes in the referendum. It may be that many will hold their noses and vote in favour simply because there doesn’t seem to be any good way of extricating ourselves from the tax without it costing us an arm and a leg.