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March 23, 2011

UPDATE March 25: Attorney General Barry Penner issued a news release which confirms government is working towards a June 24th HST referendum to be conducted by a mail-in ballot. Details on equal funding for both sides are yet to come. It looks like only one of Premier Clark's leadership promises on the HST will be broken, but that may be a good thing since conducting the vote by way of a mail-in ballot will save an estimated $18 million, and it may increase voter participation.

Plotting June 24th HST Vote

Christy Clark's proposals to deal with the HST were some of the most specific promises she made during her leadership bid. Her leadership campaign policy book said the same thing she declared in a video on her website, namely:

Our government will proceed with a June referendum on the HST.

Is it possible that as Premier she will break two of those promises? It is hard to imagine Clark's cabinet happily providing Bill Vander Zalm and Bill Tieleman with a half million dollars to campaign against the HST. Provincial elections are conducted with hundreds of polling stations at a cost of about $30 million; a postal ballot could be done for less than half that amount. If Clark's cabinet forces her to break those promises, it will be a blow to her credibility.

Kevin Falcon, Clark's chief leadership rival and now Minister of Finance, proudly proclaimed that he's always supported the HST. He's toyed with the idea of selling the HST by offering to reduce it from 12% to 10%. Those who understand the numbers know that is an unaffordable option. Reducing the tax rate would have significant implications for government revenue, requiring major spending cuts or big increases in other taxes.

According to the budget tabled last month by former Finance Minister Colin Hansen, the HST is expected to generate $7.2 billion in revenue this year, rising to $8.1 billion in 2013-14. After rebates are subtracted, the revenue is $5.8 billion this year, rising to $6.5 billion in 2013-14. Depending on how rebates would be adjusted, cutting the HST to 10% from 12% would cost between $1.3 billion and $1.6 billion. To put that in context, the MSP premium tax and the property purchase tax are both expected to raise $1.9 billion this year. One of those hated taxes could be reduced by 75% for what it would cost to cut the HST by two points. On the spending side, health, education and welfare (social development) are the only ministries whose budgets are greater than what it would cost to cut two points off the HST. After rebates are considered, the hated HST does not bring in any more money to pay for health and education than the old PST. Changing back to the PST would not reduce government revenue except for the transition costs.

By the first week of April the panel that was appointed to provide information on "the fact base that accurately describes the implications of each option in front of voters" will deliver its final report. Cynics suggest that the "facts" will be one-sided, but time will tell. It is possible that government plans on announcing funding for both sides and the schedule for necessary legislation when the panel's report is released. The final report may already be written and in the hands of the Public Affairs Bureau as government plots its next move.