The stage is set for dismantling B.C.’s harmonized sales tax, following its rejection by a majority of voters in referendum results released Friday.
The HST was rejected by 54.73 per cent of eligible voters, Elections BC reported. The government has promised to abide by a simple majority of voters.
White Rock Fight HST campaigner Aart Looye said the result makes worthwhile all the hard work put in by committee members on both the original petition against the tax and the subsequent referendum.
“We spent literally thousands of hours trying to put the cause through,” Looye said. “And sometimes, we felt like David against Goliath.”
But while the vote went narrowly in favour of the HST in White Rock and South Surrey, Looye said he regards the overall referendum result as a confirmation that people do have a voice in the political process.
“We’ve shown that people do have an input into what goes on inside the province, and that, in itself, is a wonderful exercise,” he said.
Voting by constituency shows a split mainly along party lines. The strongest vote against the HST was more than 75 per cent in NDP-held Surrey-Green Timbers and more than 72 per cent in Surrey-Newton and Vancouver-Kingsway, home constituency of NDP leader Adrian Dix.
While two local Liberal strongholds – Surrey-White Rock, and Finance Minister Kevin Falcon’s home constituency of Surrey-Cloverdale voted narrowly in favour of keeping the tax, a third, Surrey-Panorama, voted 53.3 per cent for scrapping it.
Surrey-Panorama MLA Stephanie Cadieux said Monday she was not surprised by her constituency’s results.
“I think we had a good feel for how the public felt about the HST, and it’s in line with the provincial result – I don’t think there’s any uniqueness to Surrey-Panorama,” she said. “The reality is the B.C. people have made a decision, and we respect it and will move forward on that basis.”
Cadieux said the biggest challenge of adjusting to the decision will be faced by business; government will try to offer updates as soon as it knows how the transition will be managed.
Cadieux acknowledged there are concerns about the length of time – estimated at 18 months – for the transition back to the GST/PST structure.
“We’ll try to move forward as quickly as we can,” she said. “March 20, 2013 is the deadline… if we can do it sooner, we will.”
Falcon did not return calls by press time Monday.
Surrey-Green Timbers MLA Sue Hammell said the result was “an incredible presentation of democracy in action,” and vindicates the NDP’s opposition to the tax.
The New Democrat dismissed government predictions of dire financial results for B.C. as a result of scrapping the tax.
“It’s been very difficult to trust anything the Liberals have said on the HST,” she said. “From day one, they have used scare tactics. But it’s the Liberals who created this mess.”
Hammell said the original Liberal decision to go with the HST was not about adopting a better system of taxation, but about accepting $1.6 billion in federal money “to help balance a set of books that were out of balance before the (last) election, a situation they minimized during the election. This is all about redressing a shift of tax away from business and onto ordinary people… and people have said ‘enough is enough.’”
Local business organizations, while expressing dismay at the referendum results, said they are prepared to offer pragmatic help in a transition back to the prior tax system.
“We’re very disappointed,” Surrey Board of Trade CEO Anita Patil Huberman said.
“Our position was that we wanted it maintained. We felt that, through the intense research our finance and tax team did, that the HST regime was much more beneficial for B.C.’s economy than the GST-PST regime.”
South Surrey White Rock Chamber of Commerce executive director Cori Lynn Germiquet said results of the referendum – including a local majority of 54.47 per cent in favour of keeping the HST – suggest the B.C. business community should work together to present options for a new tax model.
“Being one of the top 10 constituencies in B.C. that supported keeping the HST provides our chamber with a clear mandate that our voters want to continue to work with other business organizations and government to develop a tax policy that responds to our economic potential,” Germiquet said.
A narrow majority of voters supported the tax in Abbotsford, Fort Langley-Aldergrove, Oak Bay-Gordon Head, Westside-Kelowna and other seats held by the BC Liberals. The strongest support for the HST was in West Vancouver-Capilano and Vancouver-Quilchena, the seat held by Colin Hansen, the former finance minister who introduced the tax in 2009.
Falcon has estimated that scrapping the HST will cost B.C. about $3 billion in the next few years. The government will have to borrow to pay back the transition fund, with a schedule that will have to be negotiated with Ottawa.
The finance ministry also projected the HST would bring in an additional $600 million in each of the next two years, based on economic growth and extending the seven-per-cent provincial portion of the sales tax to a variety of services covered by the federal goods and services tax.
Another cost to the provincial budget will be re-establishing a provincial sales tax administration and audit department.
Businesses will have to forgo input tax credits available under the HST, and convert cash registers and accounting systems back to collecting the GST and PST separately.