It's easy to hate

HST, that is.

I'm going to start this entry with an important disclaimer that I am in no way a tax expert, an economist, or any other type of authority, nor do I know all the details about the BC-HST. What I do know, however, is that this issue has become more of a public relations nightmare than it is a real discussion about what the benefits and drawbacks of the HST are. I also know that I support the HST in principle and that I did not vote for the petition against it.

Let's talk about how the HST came into being. The federal government very generously offered to help the provinces streamline tax collection by using their rules. Very generous indeed, as they're paying millions in transitional funding to help the provinces through. Instead, it's the provinces that need to revamp all their rules; but this makes sense for them too, because they have a template they can just copy.

Moreover, the GST and HST are sales taxes that make sense, in that they tax the value of the final product. The PST, on the other hand, is a retarded tax. Not only does it tax every level of production, such that goods and services requiring multiple production steps have been taxed many times, but the implementation of this tax is so convoluted with ridiculous, archaic rules, that most companies and the BC government have to employ their own "PST" experts to interpret these rules.

So you can see immediately the benefits of the HST - more business productivity, less costs spent on unproductive accounting. And for those who argue that big business will benefit more, this is actually not true, as they're basically funding the implementation of this tax because their "rebates" or cash flow back is delayed by a few years. There are some real problems, however.

One is that the federal government, for some ridiculous reason, wants the provinces to collect HST on almost everything. This impairs the province's ability to tax things differentially based on what makes sense to different economic classes. For example, right now, food that you buy at restaurants is PST-exempt, because food is an essential of life. Stereos, on the other hand, are not, and so you are charged PST and GST on top. However, with the inflexible HST with limited exceptions, things like massage therapy, new houses, non-prescription drugs, and food, which were all previously PST-exempt, are now going to be charged an HST.

Another thing to consider entirely has been the poor PR and even poorer respect of our provincial government for public opinion. Consider how (right) before the election, the BC Liberals told everyone how they were not going to implement the HST. Then they turned around and announced with limited consultation that they were (in their minds, what else were they going to do? Were they going to turn down a billion dollars from the federal government, plus improved business competitiveness in the Canadian and North American economy?). Then, they ignored public resentment of the government's lack of communication and transparency. They decided to "restructure" how some health care workers are paid such that their salaries are HST-exempt, while obviously, no amount of restructuring a small pub owner will do is going to help him. Speaking of pubs, theoretically, the HST is one thing that would have actually decreased the cost of liquor in BC, except that the government decided to keep liquor costs neutral through the transition (by increasing its tax portion), which was only seen as another cash grab. The government ignored Vander Zalm and didn't even register as an opponent to the petition, hampering its legal ability to challenge its legitimacy or even campaign for the HST (which they are doing anyway, and of course Vander Zalm is now challenging their legitimacy). Then we have a cabinet minister leave the Liberal ranks and be hailed as a hero for democracy.

What a mess. Let's think rationally here. Apart from the numerous political lessons that can be learned here, what needs to happen is a streamlined tax, like the spirit of the HST, that does not make things more expensive for the average or below-average Canadian. In other words, we need a flexible HST, or a big HST (12%) and small HST (5%), that can be differentially applied to items based on their nature. In return, the government can keep its "rebates." That is my solution.