The HST referendum is only a few weeks away and there has been much back and forth from both sides.
There has been plenty of negativity on Vancouver Island about the HST and a desire to go back to the old PST-GST.
Yes, the HST was implemented poorly by the government and people felt betrayed as to how it was put in place. The lack of information provided by government added to the confusion and anger towards “another” tax.
It’s not another tax but really a streamlining of two taxes — the PST and GST into one HST.
What is confounding many people is that the 12 per cent applies across the board on most goods and services rather than just five per cent on some goods and services.
In the big picture, the government recognized the various disparities after implementation and thus the reduction to 10 per cent to put the consumer back on par with where they were pre-HST.
To the second question — no taxes are good, but they are a necessary evil.
If we are to rely on the government to pay for the increased level of services we demand these days — in health care, education and crime prevention — then government needs to pay for these services. Taxes need to be efficient and derived in a simple fashion.
The PST-GST tax was archaic in form, efficiency and derivation. Since businesses across the province are the collectors and remitters of such tax, they are tasked with the administrative burden of managing the tax.
These aren’t just big businesses; they are small businesses, too. It is a little-known fact that 98 per cent of the businesses operating in the province employ fewer than 10 people. It is small business that has had to manage this archaic system.
The HST vastly simplifies things for small businesses so those businesses can concentrate on delivering the best goods and services, in the most efficient and cost-effective manner.
But the HST provides many more benefits especially to those businesses involved in the natural resource sector on Vancouver Island (and across the province) — forestry, fishing, aquaculture, agriculture and mining.
Virtually all the jurisdictions in the world that local companies in these sectors compete against employ a value added tax similar to HST, not a punitive tax that adds to a company’s cost structure.
The HST allows companies to reduce their costs. The savings generated from not having to pay PST allows companies to reinvest in equipment. As companies gain efficiencies, they become more profitable and can afford to pay higher wages to attract skilled labour — most of which is unionized labour.
In addition, as businesses reinvest, expand and hire more people, they demand more goods and services from suppliers. To meet this new demand, suppliers need to carry more products and hire more personnel to deal with customers. To go back to the old PST-GST would hamper investment — the trickle-down effect of less spending by businesses would lead to layoffs and ultimately a contraction in our economy.
Is that what we really want? I don’t think so, and that is why I’m voting NO to extinguishing the HST.
Editor’s note: Justin Rigsby is a Comox Valley businessman and former Chair of the BC Chamber of Commerce.