Monday, April 12, 2010

Timing of the HST announcement by BC

Much of the anger against the HST is about the timing of the government decision, I have no problem with it because it was the right thing to do.

Here is my take on some of the issues related to this:

1) Die they lie in the election?
I reading and listening to everything I can on it, I would not call it a lie because it can not be proved as a lie. If they had said "We will never introduce the HST", then they clearly would have broken their election promise. What they said is they had no plans to introduce it. Plans change. I would find it unethical if they had already changed their plans during the election and were planning on the HST, but there does not seem to be any evidence to this effect.

2) The sudden timing right after the election could not have happened that way.
Well, yes it could. From time to time governments make decisions quickly because the circumstances presented themselves. Ontario announced their move to the HST on March 26th 2009, shortly before the provincial election. The government of BC had only two weeks to review and impacts of the introduction of the HST. There is no way any serious review could have happened in that time and there is no way any recommendations would have come to the government.

With Ontario agreeing to go to the HST, there was clearly an interest from the federal government to get other provinces to follow along and have the same start date of July 1 2010. During an election the federal government would not trying to make any deals or offers to BC.

Post election it is realistic and plausible the feds came to BC and made an offer to the province to accept the HST. By this time, six to eight weeks after the announcement by Ontario, provincial civil servants would have been in a position to make a recommendation to the government about the HST. Assuming the economists had done their homework, they likely recommended adopting the HST, but we will never know because would have been in a cabinet briefing note we will never be allowed to see.

What is likely to have been in such a note? The benefits to the forest industry, the dangers to film and high tech if Ontario has the HST and BC does not, cost savings to government and business from having only one tax, and the general benefit to retailers. The marco economic arguments for the HST are strong and well understood.

From everything out there, the HST was not a request by BC of the feds, but an offer from the feds to BC. We will never know, but the $1.6 billion may have been a one time take or leave it offer.

The agreement to the deal and the date that it came were quick, but if you noticed how unprepared the government was to sell the idea to the public, that indicates to me that this really was not on their mind before the election. They did not have a whole of host or rah rah people on hand for the announcement, they did not have examples of many different scenarios. I remember listening to Colin Hansen in an interview about the HST shortly after then announced it and clearly he did not have some long set of examples and clear message to sell. That alone says a lot about how fast it went.

3) Should governments change their minds?
Yes, if you have a chance to do something that is a good thing and refuse to do it because you had not said you would do it, there would have a lot of good programs and policies not introduced.

The current government was very anti the Treaty process, but once they were in government there attitude completely changed to aboriginal decisions. This was the right thing to do.
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