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September 1, 2010

HST Pre-Election Documents Released

Members of the Victoria press gallery deserve praise for prying damning documents out of the Campbell government. It is not likely an accident that the government waited until two days before the last long weekend of the summer before finally releasing heavily edited documents on its pre-election briefing on the HST.

A March 12 2009 briefing note for Finance Minister Colin Hansen, prepared by one of his acting assistant deputy ministers, warned Hansen that Ontario was about to announce implementation of the HST and Hansen might be asked for BC's position.

As argued here with respect to early bad news on HST impacts, the March 12th briefing note advised Hansen that: "... the negative effect of higher consumption taxes occurs faster than the positive effect of lower taxes on investment goods and exports." It went on to note that it "may take five or more years before the impact on GDP is positive and even longer for real wages and job numbers to recover." Hansen claims he didn't pay much attention to the briefing note, suggesting he prefers to be seen as incompetent rather than as a liar.

The newly released documents make it clear that the credibility of the Campbell government continues to be a bigger issue than the effects of the tax. Regardless of arguments over whether there will eventually be sufficient benefits from the HST to offset the obvious negative effects, virtually everyone can understand that the 2009 election victory for Campbell was based on lies.

In my experience, the government frequently denies the existence of documents that common sense indicates would have to exist. That raises the question of why it took 17 months from the time Hansen received his March 12th briefing note until it was made public. Officials may have considered denying the existence of the briefing note, only to worry that someone in the media already had a leaked copy. It would be fascinating to review the documents and discussions that took place before the HST evidence was finally released.