The B.C. government is moving to scrap the harmonized sales tax and return to the old system after 54.73 per cent of voters province-wide – 66.19 per cent in the riding of Columbia River – Revelstoke – voted to scrap the controversial tax and reinstate the provincial sales tax and goods and services tax.
The results of the referendum were announced by Elections BC shortly after 11 a.m. Friday morning. The Liberal government said it would abide by the results.
“It’s a good day for democracy and for the people of this region,” said Columbia River – Revelstoke MLA Norm Macdonald, who actively campaigned against the HST. “When you see 66 per cent, you know you were speaking for people.”
He said the result was a rejection of both the way the tax was introduced and of the $2 billion tax shift it represented from corporations to individuals.
The HST was introduced by the provincial Liberal government following the 2009 election. Thousands of residents opposed its introduction, both because of the way it was introduced and because it meant extending the sales tax to many goods that were not covered by the PST.
“People understood very clearly how the tax was going to impact them and decided it wasn’t in the interest to their communities so it wasn’t in their interest,” said Macdonald.
The government touted the tax as being more efficient and better for businesses and said the impacts would trickle down to the general public through lower prices and more jobs.
“I’m very pleased for the general public and consumers and ultimately that’s what’s important to me,” said Angela Waterson, the owner of 2nd Chance/Escape Within. “At my level of business, I just want what the people want.”
At Skookum, new manager Mike Gravelle, who has 15 years experience in the retail industry, said he didn’t think the HST made a big difference to people’s shopping habits. “People are still buying if they want something.”
The store’s bookkeeper Jan Frysuk added the bike shop would benefit because the PST doesn’t apply to most of the goods it sells. She said there was a slow down when the HST was first introduced but that people “got used to it”.
The taxes demise is not good news for everyone. At Downie Timber, the HST encouraged investment and made the mill more competitive, said CEO Jack Heavenor.
“From a forest industry perspective, when things have been so tough the last few years, it was one of the only positive things that had happened and now it’s gone,” he told the Times Review. “We can’t win and we’re losing all around.”
He said Downie would have to work harder to make up for the efficiencies afforded by the HST. “We’ll have to try and make them up in other areas.”
When asked to respond to Heavenor’s comments, Macdonald, who is also the forest critic for the NDP, said, “The forest industry is really important but you have to remember there was no PST on the forest industry. Most of the things they would be purchasing, they don’t pay PST since 2003.”
He called back a few minutes later, worried that he sounded dismissive of Heavenor’s concerns.
“What I woudl say is Downie’s hugely important to Revelstoke and these have been tough years,” he said. “The people in Revelstoke have been clear in the direction they want to go and that’s something that has come across. All the way through people told me that.”
“I don’t underestimate the challenges that the forest companies face,” he added.
Finance Minister Kevin Falcon said in a news release that the transition back to the GST and PST would take a minimum of 18 months and the HST would remain in place during this time. The HST credit would still be given out until the PST is re-implemented.
Premier Christy Clark vowed that the former provincial sales tax will be reinstated with the same exemptions that existed before July 2010. That means restaurant meals, haircuts and a variety of services will only be subject to the five-per-cent federal goods and services tax, but the transition is expected to take a year and a half.
Finance Minister Kevin Falcon has estimated that scrapping the HST will cost the province about $3 billion in the next few years. The B.C. government will have to borrow to pay back the $1.6 billion transition fund from the federal government, with a payment schedule that will have to be negotiated with Ottawa. The government will also have to forgo projected revenues expected to be brought in through the HST.
Falcon said there will be pressure on B.C. to contain spending, but he intends to meet his target of returning to a balanced budget by 2013-14.
With files from Tom Fletcher/Black Press