I’ve been giving some thought about the upcoming HST, which will harmonize the 5% federal GST with our existing 7% PST into a single 12% tax. From what I understand, this is a boon to capital-heavy large business, particularly in manufacturing – the savings there can be immense. So I understand the point of it if you’re a BC Liberal – the remnants of BC’s heavy industry & forestry are core supporters of the party. But it strikes me as a move that will serve to alienate virtually every other sector. As a small business owner, the only impact I see for my business is that all my services are about to get more expensive – until now, I’ve only had to charge GST to my clients, because I do not deliver a physical product. However, I believe I’ll now have to charge (and collect) HST – so suddenly everything I do costs my clients 7% more. Not ideal when many clients are working with us to find ways to deliver services more cheaply, or are scaling back project ambitions due to cost, etc. For Jeff, who in sales entertains clients (both current & prospective) a fair bit, our acquisition costs will rise, because restaurants will also charge HST on meals. So I’m not a huge fan of the tax itself.
I’ve also been thinking about the timing of the introduction of this tax, and I think it is brilliant political maneuvering by the Liberals, although I suspect they miscalculated the response. The NDP just lost an election by campaigning on “Axe the tax” – certainly, a different tax – but a tax all the same. And that campaign by the BC NDP backfired hugely, and lost them support of many organizations & supporters. So, one would think, their willingness to oppose a proposed tax would be lessened. The Liberals also just won an election and are riding high, with the next election years away. The first year in office is definitely the time to do anything unpopular – we’ll all have either forgotten or grown used to whatever change is being made. Finally, because we are in a recession, the Liberals can spin this as being “economic stimulus” in the grand tradition of right-wing trickle-down economics: help BC’s “core” industries, and let the wealth trickle down from there. Never mind that increasingly, BC’s core industry appears to be service-based, as the Georgia Straight pointed out.