Wheat from the Chaff

The HST Debacle

In todays' Vancouver Sun, Vaughn Palmer offers a devastating critique of the BC Liberal's handling of the HST. Palmer highlights the key revelations of new government documents from a FOI request regarding the HST. Palmer explains that senior government officials were discussing the HST well before the last election of May 12, 2009. He concludes that, "Far from the HST being off their radar screen, as Premier Gordon Campbell and Finance Minister Colin Hansen have claimed, virtually every aspect of the subsequent tax regime had already been sketched out in the briefing notes well before voting day."

In January and March memos, these officials were discussing the HST process in Ontario, and examining it in relation to British Columbia. They concluded that the HST would have, in the short run, a negative impact on BC's economy, but that federal transition funding and flexibility regarding exemptions were available if BC met the federal government's July 1st deadline. All of this Colin Hansen would have known before the election, assuming he had read his memos - and assuming that no senior official would undertake serious analysis without permission or an initiative from his or her minister.

What is truly heartbreaking about this debacle is that one of the most important predictions from senior staff did not come true. As Palmer recounts, staff were worried about "consumer outrage" over the shifting of the tax burden within the HST. Yet this has not happened. The outrage we hear from Vander Zalm's group and from the media is that the government lied to us during the election campaign. Or, we hear about the tax increases on certain goods and services (like restaurant bills) that were previously PST exempt. Both of these are valid points, but they miss the biggest problem of the HST. According to Palmer's summary, the business sector would "get a huge break on taxes... as its share of the sales taxes dropped from the current 48 per cent to 11 per cent. The bite on consumers would soar from 48 per cent to 87 per cent, a tax grab of about $2 billion every year."

Unfortunately, this explicit act of trickle-down economics has barely registered on popular consciousness. We are so overwhelmed by the "more taxes are bad" message that we forget that taxes are here to stay, so the biggest issue should be who pays the bills and in what percentage. And, by getting the middle class to swallow the issue of general tax rates, and not tax shifting, the elites are able to reduce their taxes without "consumer outrage". Indeed, the business community can even overtly block the anti-HST initiative campaign without so much of a whimper, one in which Maclean's labels the initiative, but not the business class' self-serving court action, as "controversial". This is a classic example of the second dimension of power, in which, according to Stephen Lukes, political and cultural institutions develop a "mobilization of bias... in favour of the exploitation of certain kinds of conflict and the suppression of others... some issues are organized in while others are organized out".* In this case, government lies (an essential part of pop culture) and new taxes (which apparently must never happen) become the focus of debate, while the issue of a shifting tax burdens is ignored. Class warfare indeed!

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*Lukes, Steven. Power: A Radical View. London: Macmillan Press, 1974.