NEWS RELEASE · 15th May 2011
Average BC family pays $1,208 per year more in HST - not $350 as reported
Fight HST Leader and former BC Premier Bill Vander Zalm says the BC Government’s “Independent Panel” report on the Harmonized Sales Tax seriously underestimates the high cost of the HST on average BC families.
“The actual tax increase under the HST for an average family is closer to $1208, not $350 as they reported,” Vander Zalm explained.
Vander Zalm says the government-appointed “Independent Panel” presented the HST in the best possible light in each of its calculations, severely diminishing the “real” impact of the tax on families by over 300%.
Fight HST says there are a number of other flaws, including the Panel discounting the impact of the HST by estimating that 90% of HST rebates received by businesses will be passed on to consumers.
“The report says that business will pass 90% of their HST rebates on to consumers in the form of lower prices. 90%! That is a ridiculous number given that we’ve seen prices go up in BC under the HST, not down,” said Vander Zalm.
Vander Zalm says the report contains several flaws:
The report incorrectly concludes that consumers in BC have a net additional tax burden of $1.33 billion when in fact it is $2.6 billion. After deducting the $400 million of income tax measures, the net HST cost to British Columbians is $2.2 billion - or $1,208 per average family – not $350 as reported.
The Panel’s figure of a 17% net increase in taxable expenditures leaves out the fact that HST is now applied to much higher cost items such as services which are labour based, so that the overall increase to consumers is 59% higher than under PST, even though the HST is added to only 20% more items.
The 24,000 jobs estimated to be created over ten years will therefore cost British Columbians approximately $100,000 each. The report shows PST previously paid by BC consumers as $3.81 billion and by business as $850 million when in fact it was $2.53 billion consumers and $2.13 billion by business. (Figures were adjusted to include the 90% “savings” from business again)
The report contradicts itself by saying the HST will stimulate business, yet if their calculation of 90% of savings passed on to consumers were correct, after tax HST savings to business would leave only 7% for reinvestment, increased wages or shareholder distribution.
The report claims 80% of household spending is taxed the same as it was before the HST. But taxable expenditures before and after the HST show 37% of taxable expenditures are newly taxed under HST for a net increase of 59% in taxes under the HST.
“Where the Panel did get it right was in their assertion that the HST will not produce dramatic results overnight. This is actually the understatement of the century, since any net benefits from the HST over the next ten years are indiscernible from normal growth, and fall into the margin of mere rounding errors,” said Vander Zalm.
Vander Zalm says the Government Panel’s report is even more devastating to the BC Liberal government than previously thought, since its estimated meager benefits are based on a “best case scenario” with unrealistically optimistic assumptions about “cost savings” passed on to consumers.
“We know now that the HST does not work. We can see it in the report and we can see it in our daily lives under this tax. Unemployment is up, prices are up, and the economy is down. Former Premier Gordon Campbell made a big mistake in taking on the HST to try to cover a deficit hole. The long term costs are extremely damaging to BC,” said Vander Zalm.
“It’s time for the new Premier Christy Clark to fess up and admit that it was a bad idea. In light of this report and in light of the serious damage the tax is doing to our economy and business, how can Premier Clark and Finance Minister Falcon continue to take the same positions as their predecessors Gordon Campbell and Colin Hansen?”
“We know the BC Liberals are very close with big business. We know the HST will provide a windfall profit to the big corporations that operate here. But the long term economic damage to BC is not worth it.”
“We urge every British Columbian to vote “YES” to extinguish the HST and return to the PST and GST with the same exemptions as before. It will save jobs, businesses, and help get our economy back on track again,” Vander Zalm concluded.