CONTRIBUTION · 29th June 2010
Premier Gordon Campbell
July 1 is the first full day the Harmonized Sales Tax takes effect and I know that most British Columbians are concerned about what it will mean to them and for their family budget. I understand British Columbians from every region have expressed frustration and anger about how the HST was implemented. I know you have many questions for our government and for me personally. Why did we say we were not considering an HST before the election? What made us change our position? Why are we bringing in the HST when much of the public opposes it? How will the HST impact my family? You deserve answers to all these questions.
Although you may not have seen much media coverage before last summer, combining the PST and GST to create a harmonized sales tax is something that has been discussed publicly for many years. Federal governments - past and present - and business organizations - large and small across the province - repeatedly asked us to harmonize the PST with the GST because it eliminates unnecessary costs, reduces administration and is more transparent.
Each time we were asked, we said we would not consider it for two primary reasons. First, it would eliminate B.C.'s ability to set our own tax rate. Second, we wanted to be able to shape our tax regime with flexibility that would allow us to exempt certain goods and services from being taxable. It wasn't until last year that kind of flexibility was available.
After the election, the Minister of Finance and I were informed that the Province's financial situation had deteriorated significantly. I asked officials to find a way to meet our budget targets without cutting core services. By late May 2009, it was becoming clear that after months of discussion Ontario had negotiated new flexibility within the HST model. Through further discussions with the federal government, we learned of additional flexibility that would allow provinces to set their own tax rate, instead of adopting a national rate of 13 per cent. This allowed us to set our own rate at 12 per cent, the lowest in the country. We were also offered new flexibility that would allow us to exempt products we felt would be important to families - children-sized clothing and footwear, books, motor fuel, diapers, car seats and a range of other products. In addition, the federal government offered $1.6 billion in transition funding. That meant we could reduce the future debt we would pass on to our children and support increased funding to both health care and education.
With those new conditions in place, we asked ourselves if the HST would strengthen the Province's economy as we move through the global economic downturn. Would the HST allow our industries and small businesses to better compete internationally and within Canada? Would it create jobs? Would it give business the ability to pay higher wages and lower prices? Study after study confirmed the HST would do all those things. World- renowned economist Jack Mintz from the University of Calgary found that moving to an HST will create more than 110,000 jobs, attract over $11 billion in new investment, increase wages and lower prices.
Those working in small business, forestry, mining, energy, agriculture, retail, transportation and construction will realize immediate and direct benefits. For the rest of us, the stronger economy will mean more job opportunities, stronger communities and more revenues to support critical public services. The HST, combined with our other tax reductions, will soon make British Columbia one of the most attractive places to invest and do business anywhere in the world.
I know many people feel like they are paying more and getting less. That's why over the last nine years our government has acted to leave more of people's hard-earned wages in their pockets. We've cut income taxes by at least 37 per cent for individuals since 2001, and British Columbians now pay the lowest personal income taxes in the country if you earn less than $118,000. The after-tax size of an average British Columbian's paycheque today is considerably higher than it was in 2001. An individual earning $50,000 a year pays $2,012 less in provincial income taxes today. That's more than $2,000 for individuals to save or spend as they choose. Cutting taxes has helped our economy stay strong enough that we've been able to make record investments into health care and education.
The HST has not been good short-term politics. But in the end, everyone has to decide whether they are going to do what is right or what is easy. I believe the HST is the right thing for our Province's economy and for our children's future. Change today will make us stronger tomorrow.