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May 20, 2012

New PST Strips Legislative Authority

Finance Minister Kevin Falcon introduced the Provincial Sales Tax Act (Bill 54) on May 14, exactly one year to the day from the next election. Just two days later, on May 16 the Bill was called for second reading debate; normally a reasonable period is allowed for interested parties to provide advice to both the government and the opposition between first and second reading on a Bill. There has been ample debate on the HST since it was announced by news release on July 23, 2009, but that is no substitute for a proper legislative review of the Bill to reinstate the PST.

When it is ended on April 1, 2013, the HST will have dominated almost every day of the Liberalsí third term. Since it took almost three years since the disastrous introduction of the hated tax to introduce legislation enabling the return to the PST, one has to ask why Bill 54 must be rushed through the legislature with minimal debate.

The referendum on the HST required the government to reinstate the PST with the same exemptions that existed in June 2010. The legal framework for the former sales tax was the Social Service Tax Act. Part 3 of that Act, Sections 69-77, specified exemptions from food through vitamins, from residential fire alarms to bicycles. There are no exemptions specified in Bill 54; the Bill gives cabinet the authority to specify the exemptions in regulations. Once a Bill becomes law it can only be changed by the legislature, but a regulation can be changed any time the government decides to issue a new order amending a regulation. Some exemptions were specified by regulation in the former PST system, but all exemptions will be specified by regulation in the system Bill 54 establishes. That means at some time in the future government could make restaurant meals or bicycles taxable again without the inconvenience of legislative debate. Likewise it could grant favours by introducing new exemptions with nothing more than a cabinet order.

It is unlikely that the Liberals would tinker with the exemptions on the eve of the 2013 election, but after that the power will be available for any government to use. Giving cabinet the ability to make substantial tax decisions without a vote in the legislature is consistent with the kind of arrogance that gave us the HST with no warning and no consultation.