Having read a great deal of information about the HST, I have come to the conclusion that it is not a good idea, period-full-stop. Here are my primary reasons:
1) Lying to the populace is not acceptable for a government. The Liberals said in their election campaign that they were not going to bring in the HST. Soon after they were elected, they brought it in. Either they were stupid and naive to think it wasn’t going to become an issue in BC, or they think we are stupid and naive enough to believe their claim. Maybe both. Either way, this is not the first time the Liberals have gone back on an election promise (remember when they said they weren’t interested in privatizing BC Rail? Oh yeah) and it is up to the populace to send a clear message that we do not accept this behaviour. What better way than to sink the sacred ship?
2) The HST introduces taxes on a bunch of stuff that wasn’t taxed before, which raises cost of living for consumers. Our economy, whether Gordon Campbell likes it or not, actually depends on consumers buying stuff. Things like houses, massage services, consulting services, etc. which were not taxed provincially under the PST and now are. There’s about 100 things being taxed now that weren’t taxed before, provincially.
3) Despite increasing tax on certain items, BC will actually lose money on this tax shift. Estimates of the total amount vary, but essentially the “tax revenue + federal bonus – rebates – HST credits” received in BC’s treasury will net less than what the treasury would receive under the existing tax scenario. Where’s the brains in that, in a time when our treasury is already taking hits, and cutbacks are rife?
Here’s what Gordo and his pal Colin should have done instead:
1) Announce the PST will be ditching its current antiquated system of collection, remittance and commission, and switching to the same model that is used by GST: Collect tax, track input tax credits, and remit the difference. No commission to collect. Businesses would still benefit from the input tax credits on the PST, which is the really big economic bonus of this tax. Businesses won’t have to deal with a complicated remittance system, which will streamline operations and probably make more businesses likely to collect and remit PST thoroughly.
2) Anything with PST on it right now keeps the PST, at the same rates as before.
Bingo – it’s a zero-sum game for consumers, and businesses get the economic boost that Gordo so dearly loves. Our treasury reaps slightly less tax revenue at first, with reduction in the amount of bureaucrats needed to babysit the PST system because it’s SIMPLE now. The economy can grow, create jobs etc. and replace the tax revenue lost from input PST credits with income taxes instead. (If we could afford to do input tax credits through HST, we can afford it through PST).
Incidentally, the petition in support of the HST Extinguishment Act is doing quite well. As of May 9, 69 out of 85 ridings had achieved the 10% of registered voters signature required by Elections BC. I was curious about those ridings who have not passed the mark, and so I did some number crunching and comparisons. I looked at all the ridings and compared the results on the petition with what party MLA sits in the riding, and where the Liberal cabinet members sit. The results are shown here: http://ow.ly/i/1D48 (feel free to retweet).
It’s mostly urban centres which haven’t passed the 10% mark, and the skuttlebutt is that urban centres started collecting signatures about a week after rural centres. There doesn’t seem to be a big difference in what party MLA is sitting in the riding – among urban centres NOT passing the 10% mark, it’s about an even split between Libs and NDPs. So it looks like it’s just about the petition organizers in those ridings needing a little longer to get organized and get out the votes. Gordo’s riding, by the way, hasn’t passed the mark, but it is not among the slowest. Given that it’s in Point Grey and most people are probably working fulltime outside the riding, I’d expect it’s difficult to find people and get them to sign. Tomorrow, I’ll run the numbers and make a chart showing the performance of urban vs suburban vs rural ridings.
Your tax dollars at work… in for-profit hands
Several of my non-profit clients are organizations that until recently have had contracts with the BC Government to deliver employment training services. In March this year, the government announced the creation of the “Employment Program of British Columbia” and requested proposals in 73 areas for proponents to offer this program.
My understanding is the Employment Program is an umbrella for a diverse range of employability training activities targeting different client groups. As the organizations and companies in the sector scrambled to respond to this RFP, it became clear that there was going to be a new industry structure with the successful proponents actually contracting out components of the Employment Program to other organizations with specialist expertise, where the population and needs of the clients warranted these specialist programs.
I realize I’m coming late to the party when it comes to commenting on this industry change, but I have been getting increasingly concerned about this government move. Seeing the list of successful proponents has crystallized my concern.
First of all, the “super-agency” structure that is getting created by this Employment Program is wasteful. Previously, the government has hired public service employees to contract with organizations who deliver programs to meet distinct market needs. The public service employees administer the contracts and follow up to see that there is accountability on how the dollars are being spent. Now, the government will still have those public sector employees on the payroll, but now they will be administering fewer but bigger contracts. The super-agencies will be ALSO hiring employees to administer contracts with organizations who deliver programs to meet distinct market needs. Yes, some of the super-agencies will do their own delivery but the nature of employment training is that there are always going to be needs for specialized training settings or structures, and it’s not efficient for the super-agencies to try to address all those needs under one roof. So the front-end organizations are still there, delivering their programs… and now there are super-agencies who track accountability etc… but the government STILL has to track accountability via the super-agencies. There’s another layer of oversight being added, with no extra money to spread around. With all due respect to the fine men and women (mostly women, really) who are working hard at all levels of this structure and who more than deserve their paycheques… this is grossly unproductive. Instead of spending money on training resources, the government has just created a new expensive layer of oversight in these super-agencies who will babysit the organizations who will do exactly what they used to do, but with smaller budgets.
There’s another element to this change which bothers me, and that’s the appearance of for-profit businesses acting as super-agencies. It bothers me because the mandate and sole purpose of a for-profit business is to make a profit and that means that every available tax dollar will no longer be going to help the citizens of our province who need employment training. In order for a for-profit business to want to engage in this industry, there has to be a reasonable expectation that some of our tax dollars will end up in corporate pockets. They might be noble pockets who are good at their jobs, but I don’t pay taxes so that a company
whose parent is a Big-10 accounting firmcan deliver shareholder returns.(Edit: 2:21pm Nov 17 – I just want to clear something up – I was writing this on the mistaken belief that one of the successful proponents (GT Hiring Solutions) was a subsidiary of Grant Thornton, but upon further investigation I have found this to be untrue. It’s a subsidiary of a different for-profit consulting firm, Chemistry Consulting Group, owned by very respectable and worthy individuals with a past employment relationship with Grant Thornton. I don’t know the details behind the name GT Hiring Solutions).
This escapade demonstrates why the Liberal government’s modus operandi of privatizing services to citizens is fundamentally and critically flawed. They may believe they’re creating jobs and reducing the size of the public service, but they’re really just handing off responsibility for effectively serving the citizens and guests of this province to a group of corporate bodies whose first
and onlypriority is profit.Damnit, I’m even madder than I was before. So much for blogging as catharsis.