Tuesday, April 6, 2010

Tweeting the HST

The opposition NDP in British Columbia has been making a concerted effort, joined now by former premier Bill Vander Zalm, to organize British Columbians against the coming Harmonized Sales Tax. Vander Zalm is trying to get enough signatures to require the Liberal government to hold a referendum on the tax.

Am putting this out there because I just don't get why certain progressives are against the HST.

Or maybe I do.

Here's a series of tweets I posted a few minutes ago:

Re BC-HST, 1) ppl will ALWAYS protest a new/chg'd tax 2) NDP = big gov, more services/progs, more taxes 2 pay 4 same 3) HST gd 4 very poor

4) w/ rebate, HST gd for lowest 2 economic classes. Only 'bad' for incomes above mid-range & only if u BUY STUFF.

5) HST - like PST/GST - is a consumption tax. IMO, that's better than inc. taxes. W/ cons. tax, u get more stuff, u pay more tax.

So, Y is NDP against this tax, if not due 2 opportunism, to take advantage of knee-jerk reaction against all tax?

If you've trouble reading Twitter-ese, the long version goes like this:

As night follows day, people will always protest the introduction of a new tax. It doesn't matter that the proposed tax is meant to cover the costs of providing new or enhanced services x, y and z. People just hate taxes, period.

The NDP supports the provision of public services by government; not, or much less so, by business. It supports tighter and more regulation, a flatter incline among classes, and so on. The party therefore supports bigger government, and less business or corporate influence, control and interference in public affairs. (So far, so good; am pretty much in agreement with this.)

For government to provide more or enhanced public services, it must raise revenue. That means raising taxes - or fees, which amounts to the same thing.

The proposed HST comes with a rebate for the lowest two economic classes. The poorest in the province will get the most.

I, for one, am really looking forward to my quarterly rebates. Am already better off thanks to the carbon tax, which the NDP also protested in its failed 'Axe the Tax' campaign.

The NDP is purportedly the champion of the underdog, the homeless, and the desperately poor.

I don't consider middle-income earners and the wealthy to be underdogs. Yet they are the only ones who ultimately may pay more under the HST. It all depends on HOW MUCH STUFF THEY BUY.

The HST, like the PST and GST, is a consumption tax. So is the BC carbon tax. The more you buy, the more you pay in tax.

Well, boo hoo!

Unlike income taxes - which I prefer to see axed - consumption taxes are useful sticks to curb people's behaviour. That's the fundamental principle behind a carbon tax, which most industry leaders support.

It's no accident that the majority of politicians don't support a carbon tax ... publicly, that is. They haven't the courage. Former Liberal leader St├ęphane Dion was one of those rare exceptions. Too bad the party elite lacked the spine to support him.

Anyway, given the foregoing arguments regarding the HST, it begs the question why the NDP is so against it. Unless that party's protestations have nothing to do with the tax at all and everything to do with political opportunism.

[cross-posted at Challenging the Commonplace]

See also this update.


Kim said...

I'll have to respectfully disagree with you on this one Chrystal.

This is a regressive tax that changes the burden of taxation disproportionately from the corporate sector (which is taxed on profit)to the consumer(who is taxed on total income).

You will pay higher taxes on electricity (as well as the 9% rate hike), internet and other things that will affect the poor disproportionately as a greater share of their income goes to service government corporate welfare. I can see your logic, since you take up so little space, from a carbon perspective. But, those who are marginal in the workforce will suffer mightily. Those who rent cheap accomodations in the country that are not well built and have electric heat.

Chrystal Ocean said...

The HST rebate more than covers the added costs, such as for electricity, to low-income earners. It far exceeds in percent what people in the lowest decile category get now from the current GST quarterly rebates and the $75 annual PST credit.

Wandering Coyote said...

How much is the HST rebate going to be?

Ian said...

But what of all the added corporate tax cuts Chrystal? While I may have no opposition to the HST in principle, the implementation that raises no extra money for government services seems painful and unnecessary. It also reduces BCs tax sovereignty to decide which items are subject to PST without Ottawa's approval.

Chrystal Ocean said...

Ian, my arguments apply to whether or not a HST is a good idea, not about how much it should be, whether corporations get tax breaks, etc. The latter I prefer to separate as an issue. Of the former, the BC Greens, e.g., agreed with a HST in principle, but not with the 12% rate; they argued instead that it should be 10%, in order to offset pricing adjustments.

Without doubt, the HST will eventually be raised. Consumption taxes almost always are, with the exception of the recent Conservative GST reductions, which were unnecessary and foolish. Nova Scotia has announced it will the HST to 15%, in order to maintain services while reducing their deficit. BC's HST is supposed to address our own deficit.

Finally, your point re sovereignty is well-noted. However, the HST is a partnership agreement between the federal and BC governments. The latter isn't losing any authority to set exemptions, rebates, credits, and so on. Partners to agreements don't necessarily cede authority to the other.

Chrystal Ocean said...

WC, here's the info from the BC Government website:

"Low income families and individuals will receive a B.C. HST Credit of $230 for individuals with income up to $20,000 and $230 per family member for families with incomes up to $25,000, paid quarterly with the GST credit."

So that $230 HST Credit is on top of the GST (and carbon tax) credit we're already getting. That's almost $20 per month more.

Have noticed that the NDP no longer is telling people that the HST is bad for the poor. Maybe they've been listening to people like me? You know, members of BC's impoverished population?

James & Company's message now is that the HST is bad for the middle class. Right, because the middle and upper classes buy more stuff.

CanuckFan said...

And will we start seeing this credit on our GST cheques starting in July, based upon 2009's tax return? Hmmm...This works out to $57.50 extra per quarter...And will we still get the carbon tax credit, too?

Chrystal Ocean said...

CF, that's my understanding. The HST is to start July 1st. Therefore, we should expect our July 1st carbon-GST credit to be boosted by $57.50.

Chad Moats said...

What about the fact that the HST will actually provide less revenue then the PST?

That fact blows your argument out of the water. It doesn't provide more money for services.

Chrystal Ocean said...

First, Chad, I never argued that the HST would provide more revenue than the PST or that it would provide more money for services. I am making the larger, philosophical point, that consumption taxes like the HST are better than taxes on income. What government x, y or z does with those taxes is a separate issue.

Second, I dispute that the HST will actually provide less revenue than the PST. Where is your evidence for this?

Third, the BC Libs claim to be implementing the HST now because they're after the feds' bonus payment, which they need to reduce their deficit. I don't recall the Libs claiming the HST will be applied to enhance or increase services. Although they might have, it still doesn't address my main point: taxes on consumption good, taxes on earnings bad.

Fourth, the other point I've been trying to drive home is that the HST credit will benefit, not hurt, people of low income. This is contrary to the fear-mongering being promoted by certain parties (both small 'p' and big).

olive ridley said...

Nice discussion. I am not opposed to a HST as long as the regressivity that comes from taxing consumption is evened out by rebates, as Chrystal says they will. I am not happy with the taxation of services. Reduction of good consumption is absolutely necessary to ward of climate catastrophe, and when you reduce the amount of goods consumed, you have to increase human capital to compensate, for example, repairing your shoes instead of buying new ones. A tax system should be designed to favour human capital and discourage resource consumption. Increase the HST on goods and decrease it on services.

But why turn a discussion of tax systems into an either/or, income taxes vs. consumption taxes, or personal taxes vs. corporate taxes? We need all of them, because they all accomplish different things, and we need all of them to be at a level that gives everyone in the province a chance to survive and prosper.

Low taxes and rebates are useless if wages are low and housing affordability is in question, which is the case in BC today. Couple this issue with daily cuts in services and inadequate unemployment benefits, and you end up in a situation where the poor have no money to buy anything, and do not get enough support from the government. Tax debates are academic if you have no money.

The HST will not bring in enough revenue for the government to replace an income tax, any argument for replacing income taxes with a sales tax need to be accompanied by what that tax would need to be in order to bring in enough revenue to run a government. You will find that number to be a large percentage, around 25-30%, imagine getting something like that through without an outcry, and imagine the regressivity of such a tax.

Income taxes are good for the system as they increase progressivity and smooth out inequality. One of the reasons for unaffordable housing is an increase in inequality, which leads to bidding up of house prices way beyond the reach of any working class family.

Attention should be paid to corporate taxes as well. Corporations don't move to a province because taxes are low, they move because of access to resources and people, we in BC with an educated population and tons of resources need to be aware of that fact and not let corporations play the "cut our taxes or we'll bail" blackmail game. What's good for business is not always what is good for the province, continually reducing corporate tax rates helps no one but the corporations.

Every tax is a tool that accomplishes something different, and a government has to use all the tools in its arsenal to achieve the difficult task of maintaining the happiness of its people. Jettisoning one tax, or the other is not a great idea, it's akin to saying my screw driver does not work with this nail, so I don't need screw drivers.

Chrystal Ocean said...

Olive said: Increase the HST on goods and decrease it on services.

Makes sense.

Robert said...

The rebate math doesn't add up. The current BC PST rebate for low income individuals is $75 per year in relation to a 7% PST tax. The GST rebate on a 5% tax is on average $280 per year for a low income individual. If the BC government paid a rebate in proportion to the amount GST rebated it would be $392 per year including the $75 per year. Apparently, the $230 alone falls far short of what the GST pays in rebate. I know, food and rent isn't included in the new HST, but everything else is in this most regressive of taxes. Your compassion for the poor who by definition "don't consume much" and therefore are little affected, is all so touching. I detect a whiff of hypocrisy in the air. This tax benefits the rich in BC, which has become an open plutocracy

Chrystal Ocean said...

Robert, the math does add up. The HST credit from the province is in addition to the GST credit from Ottawa.

The anti-HST side isn't telling the truth in terms of the impact of the HST on BC's lowest income households. We benefit, not just because of the increased credit from the province but because we consume so little.