Friday, August 20, 2010

Decision on the HST Petition

You can find the full text of the decision by the judge Robert Bauman at this link.  It is a short decision and therefore a quick read.


These two early paragraphs speak the heart of the decision:
[4] The issue then squarely arises: Does this exercise in grassroots democracy founder on a strict interpretation of the legal requirements which must be met to set it in motion under the RIA?
[5] I have concluded that it does not, that the Initiative Petition complies with the spirit and letter of the requirements under the RIA on a proper legal construction of those requirements and that the CEO was correct in his decision approving it under the legislation.

The judge finds that because BC and Canada signed an agreement,The Comprehensive Integrated Tax Coordination Agreement, there is an area of jurisdiction for the Province.  I find the logic used by the judge a little bit stretched, though it can work if one uses the termination process in Part XV.   The idea is that if BC government revokes involvement in the CITCA then the HST by extension ceases, though the process within the agreement takes 18 months after the start of the next quarter.  The problem is that this can not occur before July 1st 2015 and then the 18 months kicks in.   By the letter of the agreement it would take till January 1st 2017 for the HST to be gone.

I think the HST could be terminated earlier than the start of 2017 if BC is in breach of the CITCA, though Canada would have to give notice and BC would have to do nothing for six months and then it still takes at least one more year for the HST to come an end.   All this depends on Canada objecting to something BC is doing and I am not sure what that would be.

The most interesting aspect is that the judge places the responsibility for making a better version of the HST Extinguishment Act on the legislature.   This means that the committee reviewing the act has a responsibility to make the act workable, this will give them something to do.   It also will make them the bad guys if they do nothing or they mess with the intent of the act.  It is not something I expected.


Tim said...

I have been trying to think of the governments options to get out of this situation. First in terms of tax you can get rid of the HST and reinstate the PST, have no provincial consumption tax completely, or keep the HST. Reinstating the PST at this point is completely stupid and I think even the NDP knows it. After Nov 1 for example much of the staff that used to collect the PST is transferring to the CRA. Plus there are people out that DO like the elimination of the PST and they tend to support the Liberals both in terms of votes and money.

Second you could just eliminate the HST or reduce to some really low level like one or two percent that would allow you to keep the transition funding but in turn have to cut 4 or 5 billion in spending on an ongoing basis. This option probably has a lot going in favor of it politically other than the necessity spending cuts to boot. No one could really oppose it including the NDP but you would have as a positive feature be cutting the ability of a future NDP government to dish out goodies to their friends without raising the tax back up.

Third you could just keep the HST and grin and bear it. This seems to be the current strategy. This maybe would work if the government had a little more oomph left in and if BC's politics was more like Ontario's.

I actually think calling an early election over this issue isn't so bad of idea. It would be the one thing the govt could do to take back control of the process. They wouldn't be ready at all for an election but neither would the NDP. The govt would be giving people a voice but at the same time moving people like Vander Zalm to the sidelines. I suspect the NDP would win but not by as much as everyone would expect which would put Carole James leadership off to a bad foot right away. The NDP which has never pledged to get rid of the HST would now have to take responsibility for what to do with it. They would also have to wear the rest of the economic downturn and possible housing bust.

Anonymous said...

Bernard, you state that the committee reviewing the act has a responsibility to make the act workable.

OTOH, Vaughn Palmer today states:

"[the Committee's] powers are limited to considering the contents without making any changes.

I haven't had a chance to review the act but I guess we are all a bit confused with this process.

Bernard said...

In reading the act again, I see I misread some of the terms and see I am in error. That is what I get from skimming the Act several times for several different reasons.

It looks like they can not change the act in committee but it would have to altered by the legislature.

Still, someone has to fix the Act to at least make it clear what it does and how it would do it.