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By LeRae Haynes

Minister of Finance Colin Hansen spoke about the HST on Thursday at the Chamber of Commerce, explaining that he had spoken to them in March about the HST and wanted to give an idea of what has transpired since then.

“We knew at the time that we made our decision last summer that this was not going to be an easy political process and it certainly has not been: it’s lived up to that expectation. I think the other thing that has been frustrating for me, certainly, and for government, is what has been an inability for us, in those key months of April and May, to really communicate to British Columbians why it’s important, why it makes sense and why it works,” he said.

(Photo by Jason Ryll)

“Quite frankly, as a government, we have done an abysmal job of communicating. Part of that is the restrictions that Elections BC put on us when they said that we could not actually send out material that we had planned to send out to British Columbians. And the other part is, quite frankly, in retrospect, we should have done a lot more last fall when people were first starting to get their heads wrapped around what it meant,” he continued. “I think that, if we’d done that earlier, we probably could have vindicated a lot of the myths that have come out about the Harmonized Sales Tax.”

He said that one of the myths that are still quite prevalent is that low-income British Columbians get hurt more. “It’s actually not the case. One of the things that lower-income individuals and families in the province receive is literally a cheque in the mail every three months which is a HST credit. What this means for 1.1 million British Columbians---one in four---is that they receive that benefit. We recognize that about 20% of goods and services end up costing more under the HST, but that cheque is there to offset that,” he stated.

He added that one of the other big myths out there today is that big business benefits more from the HST than small business. “It’s actually the other way around. There are virtually very, very few companies in British Columbia that do not benefit by the removal of the PST system. That’s because every small business has things that they were paying PST on, like their telephone and computer costs, which have now come down by 7%. Office supplies have come down by 7%.

“Some companies may say, ‘I’m not lowering my prices just because my costs have come down,’ but it will mean that they will be able to forego price increases that they may otherwise have had to implement in order to continue to be profitable. We’re seeing examples of companies that are actually rolling prices back,” he said.

Another myth, according to Minister Hansen, is that communities on the BC/Alberta border think that this will make things worse for them, but that it’s actually the reverse. “It makes things better, because for a company operating on the BC side of the border, this levels the playing field. Now a company in BC pays the same for things like flat-deck trucks, for example, that their competitors in Alberta pay.

“Another myth that I’ve come across is people who get the HST and see that it’s better, but want to know why we made an explicit promise in the last election not to bring in the HST, and then turn around three months later and do it,” he explained. “I can tell you unequivocally that no such promise was ever made. What happened during the election campaign is that we get a plethora of questionnaires that come in on every subject under the sun. Two of the questionnaires asked about the HST, because Ontario had announced that they were going to the HST just before the election.”

He said that the answer from the Parliament Office to the two questionnaires was that the HST was not contemplated and was not on the radar. “It was after the election, based on information that the Ministry of Finance officials brought to us, particularly around how to manage the huge revenue fall-off that hit us between the eyes last summer. We made our decision last July, based on that decision, knowing it was going to be politically tough, but the right thing to do for the economy,” he continued.

“When you look at projects like Prosperity Mine, for example, when you look at the huge economic problems in the Williams Lake area, we’re going to need an investment. We need to be able to attract that investment, and this elimination of the PST is absolutely critical to make sure that BC is an attractive place for those investment dollars to flow,” he said.

He explained that the HST reduces the tax on new investment, by about 40%, and for Ontario to be in that world, and BC not to be there, we would have seen investment dollars flow into Ontario instead of British Columbia.

“Frankly, there are three provinces left with the old style of PST: Saskatchewan, Manitoba and PEI. I predict that that’s exactly what they’re going to see—that they’re much less able to attract investment,” he stated.

“Since July 1st I think there are two dynamics to this. One I think can best be explained by people who never really looked at their receipts before. Two weeks ago, while speaking in Salmon Arm, someone told me that the HST had just cost him $172 because he had to buy a new dryer. I explained that his dryer cost him exactly the same: he paid 12% tax six months ago and there’s still 12% on it today,” he added. “The other dynamic is that the people that come in expecting to pay 12%---more than before and finding out that, on the vast majority of things, the tax is the same.”

He said that he doesn’t think the answer is to throw a bunch of advertising at it to help people understand it—he said that people are just going to have to live it and experience it.