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Controversial combined tax one-year-old today

Former British Columbia premier Bill Vander Zalm, centre, and his wife Lillian, right, celebrate as they leave B.C. Supreme Court after a judge ruled the anti-HST petition he led was valid in Vancouver, B.C., on Friday August 20, 2010.


A year ago Victoria bike shop owner Martin Clermont was giving the gears to the harmonized sales tax, saying its introduction would hurt his business and the British Columbia economy.

This year, as the HST marks its first anniversary on July 1, Mr. Clermont is prepared to admit the ride wasn't as rough as he expected.

He said his anger over the Liberal government's sneak-attack introduction of the value-added tax is still there.

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But now Mr. Clermont said he wants it to stay, especially since the government will cut the HST to 10 per cent from 12 per cent if British Columbians vote to keep the tax in this summer's mail-in referendum.

"If you say yes to the HST as it stands right now, we're going back to 12 per cent," said Mr. Clermont. "We're not getting the 10 if we say yes. We've called their bluff. Nobody liked the way it came in.

"They shoved it down our throats and everybody got angry and in light of that they are cutting it from 12 to 10."

Mr. Clermont was especially concerned about the HST when it was introduced because it would add seven per cent extra to the cost of buying a bike. For decades green conscious B.C. governments exempted bikes from provincial sales tax but the HST, which combines the five-per cent federal Goods and Services Tax with the former seven-per cent provincial sales tax, now applies to bicycles.

But Mr. Clermont, who noticed an increase in bike sales prior to the HST becoming law on July 1, 2010, said sales patterns haven't gone downhill since the HST added the extra seven per cent.

"There was kind of an initial consumer reaction but that has faded," he said.

What hasn't faded is the political vitriol over the tax.

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Former premier Gordon Campbell, despite winning three consecutive elections, announced his early resignation last fall, admitting public anger over his government's introduction of the HST in July 2009 hadn't subsided and his unpopularity was overshadowing the work of the government.

Premier Christy Clark, who succeeded Campbell in February, said she supports the HST, but moved to lessen its impact on family pocketbooks after an independent panel concluded the 12 per cent HST would increase family costs by $350 a year.

Ms. Clark said her decision to drop the HST to 10 per cent by 2014 means families will be paying $120 less tax by then.

"Taking the HST from 12 per cent to 10 per cent is going to have a big impact across the board for families," she said recently.

"The middle class is getting squeezed. People are feeling like it's way harder to get ahead every day. We have to address that."

HST critics, including the Opposition New Democrats and Bill Vander Zalm's Fight-HST forces, say the value-added tax will hurt families because it dumps $2-billion of the tax burden onto consumers from business.

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That shift will actually hurt the economy and businesses because the average British Columbians will have less money to buy goods, said NDP Leader Adrian Dix.

"The HST was, is and remains a massive tax transfer onto working families," he said. "As (former Liberal finance minister) Carole Taylor has said very eloquently, a $1.8-billion tax transfer from big business to working families."

Finance Minister Kevin Falcon said the Liberals moved to lessen the HST's bite with the two-point reduction, but the NDP hasn't said how it would plug a $3-billion hole in the government's finances if the province goes back to the old GST-PST system.

B.C. would have to repay the $1.6-billion it received from Ottawa to switch to the HST, forgo revenues it receives from collecting the HST and spend millions to rehire workers to administer the old tax system, he said.

"Adrian Dix is out there campaigning for a PST/GST that will have a negative $3-billion hit to the budget of our province, and in the same time he's out there kind of giving every indication he's willing to provide wage increases in the public service, that he's going to spend more on every ministry of government, and I can tell you those are multibillion-dollar commitments that don't square with having $3-billion less money," Mr. Falcon said.

Jock Finlayson, spokesman for the Business Council of B.C., said HST is a better form of consumption tax than the former GST/PST model.

"And at a 10 per cent rate by 2014, the HST will actually entail a lower tax on most purchased items compared to the combined rate that will apply if British Columbians choose to return to the old mixed PST/GST model."

On Thursday, Elections BC extended the deadline for the mail-in vote due to the recent Canada Post strike. Voters now have until Aug. 5 to get their ballots in, rather than July 22.

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