HST – Son of GST
By Peter Ewart
Thursday, September 10, 2009 03:47 AM
Like one of those B movie sequels, such as the Bride of Dracula or Son of Frankenstein, the infamous Goods & Services Tax (GST) - first introduced in 1991 by the Brian Mulroney government - keeps rearing its ugly head.
Its most recent reincarnation is the BC government’s Harmonized Sales Tax (HST) which is proposed to be introduced in the province in 2010. How are the two taxes related? Well, both are called “value-added” taxes (a euphemism if there ever was one).
But, historically speaking, much more connects these taxes than that. Indeed, when the GST was imposed in 1991, the Mulroney government also had the intention that the provincial sales taxes would be combined or “harmonized” with the GST. At least that was the idea. Thus, the first part of the GST “plan” was to impose the tax federally. The second part was to install it provincially with an HST. Thus the HST is actually the “son” of the GST.
What happened? If there ever was a cautionary tale for politicians, the GST is it. The Brian Mulroney government, puffed up with arrogance, declared that the GST would be imposed on Canada come hell or high water. Yes, it was imposed. But there was a cost. Two MPs in Mulroney’s Progressive Conservative government quit, while many members of the Party resigned. One of the biggest beneficiaries was the rising Reform Party, which was strongly opposed to the GST.
A great controversy shook the country and many people were outraged with the high-handed behaviour of the government. In the 1994 election, the Progressive Conservative government was slaughtered, going from a majority of seats in Parliament to a miserable two seats, one of the biggest electoral defeats in Canadian history.
A large part of this catastrophic defeat was voter opposition to the GST. And it is not hard to see why. Each time, a voter would pay for a good or service, he or she would be reminded of the Mulroney government’s role in imposing this tax. It was as if Brian Mulroney’s smiling face was stamped on every bill or receipt.
At that time, seeing the widespread opposition to the GST, the provincial governments backed off from bringing in a “Harmonized Sales Tax,” perhaps thinking they would do so after a few years, once the controversy had died down.
Since then, provincial governments in Quebec and the Maritime provinces have brought in their versions of the HST. But Western Canada and Ontario have continued to shy away. Until now.
Both British Columbia and Ontario have announced that they will be bringing in the HST next year. The most highhanded in this regard has been the BC government. During the provincial election in May, it denied that it was even considering adoption of the HST, only to turn around two months later and announce that the HST was on the agenda.
Some people argue that all of this will be forgotten in four years and that it will have little effect on the next election. I am not so sure.
For one thing, by bringing in this highly unpopular tax, Premier Campbell is fracturing the “grand coalition” that is necessary to ensure a Liberal victory in the next provincial election. Indeed, it was the opposition of the provincial Reform Party and other political forces that cost Campbell the provincial election in 1996.
For another thing, the next provincial election is scheduled for 2013. In the years leading up to it, people will be forking out extra money for the HST on home renovations, real estate fees, haircuts, and a blizzard of other goods and services.
Indeed, on election day itself, some voters may drop by a restaurant for a coffee and doughnut before casting their ballot. When they are at the counter reaching in their pocket for coins to pay the extra 7% for the HST, guess whose mug shot will be stamped on the bill?
Peter Ewart is a columnist and writer based in Prince George, British Columbia. He can be reached at: peter.ewart@shaw.ca
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Posted by: CaringSoul on September 10 2009 8:05 AM