Monday, July 5, 2010

Day Five of the HST in BC and Ontario

We are five days in with the HST in these two provinces and so far I have noted no dramatic prices hikes to anything I bought.   Yes, the meals at fast food outlets was more, but really it is better I do not eat at them anyway.  

I am really curious to see of the anger over the HST can last?   How long will people remain angry over the tax?

Will people still be angry about the tax in September 2011 when the referendum would be?  I suspect there will be enough anger around that the public will vote for the HST Extinquishment Act.

Will people still be angry in May 2013 when the next election comes around?  There are a lot of people angry with the current government for a host of reasons, but the election campaign starts in just over 32 months, this is a long time for the governing party to make changes to how they govern and who is the leader to make them competitive.  I do not think the HST will be a big issue in the 2013 election.  The bigger issue will be the impact of a resurgent BC Conservative Party.

Will there be enough anger in November for recall campaigns to be successful?   I think this really depends on how the government reacts to the petition.   If they commit to a referendum, the non-partisan reasons to recall the MLAs is much lower.   Also, November is a bad time in much of rural BC to start a recall campaign.

The recall threshold of 40% of eligible voters is a high number and needs a large non-partisan effort to remove an MLA.   I do not think any purely partisan effort will succeed.    The one thing the Liberals have going for them is that about half of the people in BC really do not want an NDP government, that should be enough to make recalls almost impossible if a referendum is scheduled.

The big wildcard out there is the legal action against the HST Extinguishment Act by part of the business community.   If they are successful, the Act is still born and can not go to the Legislature or referendum.   If they fail, there is a clear legal problem with the existence of the GST as the Act, as written, basically says the province get of the HST because it is not constitutional.   To me this says the whole idea of a federal sales tax of any sort is not legal.

Of bigger concern to my is the retroactive nature of what is being proposed.   The financial impact to a company could be huge if they have to retroactively pay PST on capital goods they have purchased since July 1st.

All of this continues to mean we are in a weird political limbo and BC and will likely remain here till the fall of 2011.   I think it could also have a dampening effect on investment in BC as there is no certainty as to what will happen in the future with respect to tax bills.
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