I’ll agree the implementation of the BC Harmonized Sales Tax or HST was poorly done and the voters of BC were probably not told the 100% truth but what you need to do is look at the tax itself. Is it really a bad tax?

No one likes taxes, but as part of a society it’s a function to fund various “necessities” in life. In Canada we have free medical, which really isn’t free since we pay for it with the taxes we pay. The people complaining about the HST, shopping in Washington State, will be the first in line to say “Where’s my Medicare?” when services are cut back (as if they aren’t enough already) as public funds dwindle.

I remember the howls when the Mulroney Conservatives brought in the original GST. It replaced several hidden taxes that consumers never saw but I think the economy is better off because of it. Some of those same arguments from back then are also being used today to denounce or support the HST today.

First off, three Atlantic Provinces, New Brunswick, Newfoundland and Labrador, and Nova Scotia all implemented the HST when the GST was first implemented, back in 1996. Their rates are 14% or 15% today (BC’s is set to 12%). Consumer prices did fall after the implementation of the HST in the Atlantic Provinces. Why should the result in BC be any different?

Next, the HST is a consumption based tax. The more you consume, the more you pay. In theory the more money you earn, the more money you can spend therefore you pay a higher proportion of the taxes collected. I would much rather have a consumption based tax than an income tax as I know I can do a much better job with my money than the government can.

A person can only do one of five things with the income they earn

  1. Save it
  2. Spend it
  3. Lend it
  4. Invest it
  5. Do a combo of the above

With an income tax EVERYONE looks for a way to avoid paying taxes – some legal (RRSP, TFSA, RESP, etc), some not (not declaring tips, paying cash for services). With a consumption tax, you pay … no avoiding the tax. Plus with a consumption tax the government doesn’t know anything about anyone. With an income tax, they know a lot!

Another thing about the HST, filing returns for businesses is simpler. Instead of having to file GST and PST returns, they now file just one HST. This should mean their cost of doing business is lower and they can focus more on the business. Anything that reduces the cost and reduces the red tape is a good thing. This should mean more resources to hire staff, lower costs to the consumer, or invest back into the business.

Finally, I don’t know if you have noticed but the baby boomers are starting to retire. This will mean lower income taxes for a government to collect. How will they replace this lost income? At least someone has the foresight to see the trend and make a unpopular and difficult choice today. I think they call that leadership.

Last comment about this, I was in line at a store a few days after the HST was implemented and the Sales Clerk rang up my items and made sure I saw the 12% HST on the bill, sarcastically thanking the BC Liberals. The person wasn’t embarrassed when I said the same was still the same price as before with 5% GST and 7% PST. They were still 100% positive the item cost me more.

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This entry was posted on Friday, September 10th, 2010 at 2:43 pm and is filed under Canadian Politics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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