08) BC VOTERS DUMP HST: TIME FOR PROGRESSIVE REFORM
By Kimball Cariou
In a historic political shake-up, British Columbia voters have defeated the "Harmonised Sales Tax," which was imposed by the Campbell Liberal government without consultation shortly after the 2009 provincial election.
The final result of a mail-in referendum was a resounding 54.7% "Yes" vote to "extinguish" the HST and revert to the former PST/GST, with just 45.3% voting "No". About 1.6 million ballots were sent in, over 50% of registered B.C. voters.
The outcome defied a massive pro-HST ad campaign by the corporate "Smart Tax Alliance" and the Liberal government. Poorly disguised as "unbiased", the Liberal campaign used millions of taxpayer dollars to convince voters that the HST would solve British Columbia's economic problems. The STA spent over $10 million to promote the HST, which transfers nearly $2 billion annually from the pockets of consumers to businesses.
Most media coverage of the opposition campaign focused on the anti-HST coalition headed by ex-Social Credit premier Bill Vander Zalm and NDP commentator Bill Tieleman. The mainstream media has called the result an "anti-tax" vote, giving it a right-wing spin.
But the referendum totals, broken down by constituency, show that working class voters were far more likely to oppose the HST than those in wealthy areas. The highest anti-HST votes came in working class ridings in east Vancouver, Burnaby and Surrey, or in areas such as Vancouver Island or the Kootenays. High-income communities such as the west side of Vancouver and the North Shore saw heavy votes to keep the HST. But many Liberal-held ridings voted to reject the tax.
While the B.C. Federation of Labour was slow to enter the fray back in 2009 (leery of association with Vander Zalm) the trade union movement did much to mobilize for a "Yes" vote. From this perspective, the popular revolt against the HST was a huge success for the working class and progressive forces.
One immediate effect was a decision by new Premier Christy Clark to drop plans for an early election call. The B.C. Liberals are now far behind the NDP and even the new provincial Conservative party in the polls. Unfortunately, this means British Columbians are likely stuck with the Liberals until the spring of 2013.
The referendum result is already being used by the Liberals as a stick to clobber public services and the labour movement. On Sept 8, Finance Minister Kevin Falcon released a "financial update", using inflated figures for the transition back to the combined PST/GST.
Well known as a hard-right corporate attack dog in the Liberal caucus, Falcon projects that the treasury will suffer a loss of $2.8 billion more over the next three years than the previous estimates. He claims that $2.3 billion of the loss will be due to the return to the PST/GST system.
As a result, Falcon says, "We're going to be very tough on operating expenditures."
This, of course, is Liberal-speak for a new round of vicious cuts to health care, public education, and social programs, which have been repeatedly cut since Campbell was elected in 2001.
But the Canadian Centre for Policy Alternatives suggests that the Liberals are dramatically exaggerating the fiscal impact of removing the HST. For one thing, Falcon's numbers ignore revenue losses which would have resulted from the Liberal promise to lower the HST by two percent over the next few years.
The CCPA calculates that "the provincial treasury would have faced a shortfall of $800 million even if the HST had survived the referendum. The real net costs of reverting to PST/GST are $1.5 billion, not $2.3 billion." Even the lower figure, the think tank points out, is highly speculative.
The CCPA's research shows that the HST is simply one element of a tax system which allows the richest 20 per cent of British Columbians to pay "a lower overall/total effective tax rate than the rest of us." The transition away from a "progressive taxation" system began shortly after Campbell took office, slashing taxes and imposing user fees across the board, with most of the net benefits going to the corporations and the wealthy.
Meanwhile, working people endure a higher cost of living and higher unemployment rates than the rest of Canada. British Columbia families are also burdened with household debt levels averaging 160 per cent of income ‑ the highest in Canada.
The fight now shifts to the need for a genuinely progressive tax system, including repeal of Campbell's huge tax breaks for the rich and the corporations. NDP leader Adrian Dix has promised a welcome step in this direction. But only the Communist Party of BC is demanding a return to the pre-Campbell tax rates on upper-income earners and corporate profits.
Most immediately, the Liberals are now directing their fire against B.C. teachers, who are engaged in limited job actions to press for pay increases to catch up to other provinces. "Can't afford it," is the Liberal mantra, even as they refuse to consider reforms which would "tax the greedy, not the needy."
With this confrontation underway, and the next provincial budget looming, the battle lines are drawn. The next few months will be critical for the future of British Columbia.
(The above article is from the September 16-31, 2011, issue of People's Voice, Canada's leading communist newspaper. Articles can be reprinted free if the source is credited. Subscription rates in Canada: $30/year, or $15 low income rate; for U.S. readers - $45 US per year; other overseas readers - $45 US or $50 CDN per year. Send to People's Voice, c/o PV Business Manager, 706 Clark Drive, Vancouver, BC, V5L 3J1.)