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HST should have been an ecologically harmonized sales tax

The harmonized sales tax—it sounds like something Confucius might have supported during China’s Zhou Dynasty. Here in BC, however, the government’s surprise announcement that we will be adopting the HST next July 1 has brought nothing but disharmony.

By August 17, 93,000 people had joined Bill Tieleman’s NO BC HST Facebook group, and on August 6, a Global TV-Ipsos Reid poll found that 85 percent of British Columbians surveyed opposed the new tax. Not much harmony here.

And why should there be? Nobody likes what seems to be a tax grab, even if businesses do reduce their prices because they will now be able to get their PST payments repaid as well as their GST, and no longer be subject to a cascading PST on every stage of manufacture or installation. When Saskatchewan’s Conservative government adopted the HST in 1991, the move was so unpopular that it is thought to have caused the fall of the government in the election that same year.

It looks really bad. Over the last few years, PST exemptions have been created for a wide range of purchases that were deemed to be in the public interest, including books and magazines, used clothing, smoke alarms, health-related items bought by people with disabilities and handicaps, work-related safety equipment, and general safety equipment, such as seat belts, life jackets, and fire extinguishers. All will now increase in price by seven percent.

The government wants us to become healthier and more active, but gone are the exemptions on bicycles, membership fees in health clubs, non-prescription medications, vitamins, and dietary supplements.

It wants to improve our schools, but gone is the exemption on school supplies. It wants to reduce air pollution, but gone are the exemptions on emission-control devices for diesel vehicles and anti-idling devices on trucks.

It wants us to play our part in the worldwide effort to tackle global warming, but gone are the exemptions on fuel-saving aerodynamic devices on tractor-trailers, electric motorcycles and scooters, and new fuel-efficient vehicles. Gone too are the exemptions on home insulation, energy-efficient windows, doors, skylights, furnaces, boilers and heat pumps, Energy Star fridges, freezers and clothes washers, wind turbines, solar photovoltaic panels, solar hot water systems, and micro-hydro turbines.

The government wants to help B.C.’s farmers, but gone is the huge list of PST exemptions that applied to almost everything a farmer might need, from agricultural feeds to wood shavings for livestock bedding.

So what is the government retaining PST exemptions for? The federal government allows a number of exemptions up to a certain value, and the B.C. government is using this to continue the exemptions (now known as a “point of sale rebate”) on books, children’s clothing and footwear, diapers, children’s car seats and car booster seats, and feminine hygiene products, as well as a partial exemption for new home-buyers, all of which seem defensible.

But it is also exempting gasoline, diesel, and aviation fuel. If ever there was a chance to create a stronger price-signal to encourage us to reduce our carbon footprints, this was it. To tax people buying solar panels, but make gasoline tax-free? To send the confusing message that the green stuff doesn’t really matter, especially when funding for the government’s wildly popular LiveSmart B.C. efficiency-incentive program has run out, is surely not what the government wants.

Here’s what would have made more sense. Charge the PST on all fossil fuels, in addition to the carbon tax, and suck up the complaining. Apply the new PST “point of sale rebates” to all things healthy, educational, and green, and use the extra income from the PST on gasoline and diesel to phase out the government’s budget dependency on $2 billion a year in revenues from oil and gas. This would become an ecologically harmonized sales tax, creating harmony where we need it most, and allowing us to use the tax system to steer our budgetary way to a healthy, sustainable world, instead of back into the fossil-fueled mess of more pollution and global warming.

Guy Dauncey is the president of the BC Sustainable Energy Association, and the author of the forthcoming book The Climate Challenge: 101 Solutions to Global Warming.