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June 3, 2010

Hansen's Misleading Information

Unlike the rapid exchange of question period, estimates debate moves like molasses in winter as ministers confer with staff for what seems like hours before answering the simplest of questions. It is much quicker to read Hansard than it is to watch the debate over any minister's budget.

On the afternoon of May 18th, the day that Finance Minister Colin Hansen's letter was published in the Province denying that any promise was made not to bring in the HST, NDP finance critic Bruce Ralston was engaged in debate with Hansen on the budget for the Ministry of Finance. Late in the debate, Ralston asked Hansen whether he was responsible for the letter in the Province. Hansen replied that he wrote it, and with that reply, Hansen lost the opportunity to blame someone else as he did in his letter when he blamed individuals working out of the party's headquarters during the campaign.

Reading all of the debate between Hansen and Ralston is an amusing exercise in tortured logic as Hansen tries to wiggle out of Ralston's interrogation. As justification for why the government suddenly concluded that the HST is the best thing for BC's economy, Hansen said: "You know, you can look back over the last ten years of B.C. history, and there was probably not a time when the adoption of this value-added tax is more compelling than it is now, given the fact that we are in the early stages of recovery. There are literally trillions of dollars of investment globally that are looking for a home, and we want to make sure that that home is British Columbia."

What Hansen forgot is that in 2001 his government eliminated the sales tax on "production machinery and equipment" (Division 13 in the Social Service Act regulations). The Ministry of Finance has not been able to produce any studies on whether the elimination of that tax stimulated investment, and it hasn't been willing to say how the HST is different than the elimination of the PST on production machinery and equipment. It appears that the difference is that business will receive HST tax credits unrelated to whether or not they invest, and that the credits that are directly related to investment in machinery and equipment will be no greater than the tax they were already avoiding since the 2001 elimination of the sales tax on production machinery and equipment. The next time Hansen is attacking others for "misinformation" he might try to explain this significant contradiction which makes his claim about a relation between the HST and investment seeking a home nothing but misleading rhetoric.