Newsletter – August 2009
August 2009 Newsletter for Seniors on Vancouver Island
JUMP TO: Message from BC Care Providers Association CEO
NDP Press Release: Hansen Must Back Up His Claim HST is Revenue Neutral
Times Colonist Editorial: HST Tax Grab Betrays Public
Vancouver Sun Editorial: HST switches tax to individuals: It’s a boon to business, and a policy reversal
HST – Devasting to BC Seniors
The Liberal provincial government has arbitrarily imposed the Harmonized Sales Tax as of July 1st 2010 which will be devastating for many seniors on Vancouver Island.
The Liberal party’s platform in the recent Provincial election contained two absolutes.
- They would not introduce a Harmonized Sales Tax (HST) system, which would merge the provincial GST (5%) with the federal PST (7%) and would be payable on everything on which we now pay PST, but not GST.
- The provincial budget deficit would not exceed the amount stated in the spring budget.
This was stated not just in the written form but also verbally by the premier, the finance minister and the liberal caucus, many, many times. What a difference a majority election win makes. The HST has now been imposed and the deficit is growing by the day. There was absolutely no public consultation regarding either of these changes. This was knee jerk politics at it worst.
As always it will be the same groups in society that will pay the price, the homeless, the unemployed, the working poor and seniors. Many seniors are still reeling from the financial turmoil that has gripped the world. As a group they worked hard all their lives, went without in many cases, to try and ensure they had comfort and dignity when they retired. Many now have lost the resources to secure those basics. Many of those in residential care now require assistance from their family or friends to pay their monthly fees.
The availability of provincially paid for residential care on Vancouver Island is a disgrace. What is going to happening when an extra 7% is added to the monthly fees of those seniors who are paying their own way on such limited resources? The system we have created could collapse. Unfortunately it won’t be Gordon Campbell that will suffer; it will be those that worked for a lifetime to create a society that allowed him to have the lifestyle that he now enjoys.
Last week, the BC Government announced plans to harmonize their provincial sales tax with the federal GST. The 12% Harmonized Sales Tax (HST) is effective July 2010. While we congratulate the province for securing $1.6 billion in new revenue from the Government of Canada, we are very concerned about the direct negative financial impact the HST may have on many seniors’ care providers in BC.
While we were not consulted about this plan, it was our understanding assurances had been made by the BC government to various stakeholders prior to the election that HST would not be accepted here.
Our concern is substantiated by the experience Ontario long term care homes are having with the HST in their province. Initial estimates suggest the Ontario HST could cost care providers over $12 million – with layoffs likely. These costs are attributed to residential seniors’ services that only require GST now, including:
- employee development
- housekeeping & laundry
- resident outings & travel
- building maintenance
- dietary contract services
- refuse removal & pest control
- landscape & snow removal contracts
- vocational therapists
We are also concerned that HST will increase the overall tax burden that health care providers pay and exacerbate existing inequities related to the differing rebates that providers receive. Currently, non-profit and private residential seniors’ care facilities receive much smaller rebates than health authority care homes.
With looming health cuts and the fact that care providers are already doing more for less, there is no getting around the fact the BC HST has the potential to have a significant negative impact of the quality of seniors’ care.
On your behalf, BCCPA is conducting a review of the cost implications of the HST and propose mitigation measures to the BC Minister of Finance in the coming weeks. These measures could include:
- Ensure Health Authority HST protection is applied to the entire sector so all operators within long term care would be fiscally neutral relative to the amount of PST currently paid.
- Provide a rebate of the provincial portion of the HST for purchased staff services.
- Use portion of the $1.6 billion in new federal funding to improve safety and staffing levels at BC seniors’ care facilities to minimum standard of 3.2 hours of direct care/patient/day.
CEO BC Care Providers Association
Established more than 30 years ago, BCCPA represents over 130 non-profit and private BC seniors’ care providers responsible for over one-third of all the residential care beds in the province (more than 10,000). Our members also create 7,000 jobs and provide home support services for an average of 4,000 seniors each year.
For Immediate Release
Aug. 4, 2009
HANSEN MUST BACK UP HIS CLAIM HST IS REVENUE NEUTRAL, SAYS NDP
VICTORIA – B.C. Liberal finance minister Colin Hansen must produce evidence to back up his claim that the new HST will be ‘revenue neutral’, New Democrat finance critic Bruce Ralston said today.
“Not only did the B.C. Liberals mislead the public about their plans during the election campaign, but the only published study on the impact of the HST for B.C. says it will be a tax grab worth billions of dollars a year,” said Ralston.
Ralston pointed to a study from the C.D. Howe Institute that finds that the HST would mean an extra $4 billion in revenue from taxes over three years. The C.D. Howe Institute states that B.C. “would raise more revenue if they applied an HST with the same base as the GST at the province’s current rate of seven per cent.”
“The finance minister has not been able to point to any evidence to back up his claim that this tax will be revenue neutral. If he has any studies that show this tax will be actually be good for British Columbians, Colin Hansen should make them public,” said Ralston.
The Campbell government has not released any information on how the new Harmonized Sales Tax will hit industries like homebuilding, foodservices and tourism, although the restaurant industry estimates it will cost their members $750 million a year in lost sales.
“Is the minister really asking British Columbians to just accept this on faith? They haven’t released a single shred of paper to support their position. Families and small businesses have every right to be concerned that this new tax will hit them hard,” said Ralston.
Ralston went on to note that the minister’s comparisons of the new B.C. tax with the impact of the HST in other provinces are misleading.
“When they brought in the HST in the Maritimes, the combined new tax rate actually went down. So for the finance minister to try to tell families that the experience here in B.C. will be the same is completely misleading,” said Ralston.
Carole James and the New Democrats have launched a petition to stop the HST, which is at http://www.bcndpcaucus.ca/en/StoptheHST
Under the Campbell government, B.C. has had the worst rate of full-time job losses, the second-worst performing economy, and the highest level of child poverty in the country.
– 30 –
The C.D. Howe study is available at http://www.cdhowe.org/pdf/ebrief_55.pdf
TIMES COLONIST AUGUST 8, 2009
More than two weeks after the government announced a new tax blending the provincial sales tax with the federal goods and services tax, the firestorm shows no sign of cooling.
Nor should it. The imposition of the harmonized sales tax will mean additional costs for most consumers.
And the way the tax was introduced has raised serious questions about the way our government works.
It is no wonder the new tax has been condemned by many businesses and an Ipsos Reid poll showed 85 per cent of British Columbians are against it, with seven of 10 reporting they are “strongly opposed” to it.
The 12 per cent HST will cover hundreds of items that are now exempt from the provincial seven per cent tax. The list includes residential fuels and heat, cable and telephone service, non-prescription medications, bicycles, school supplies, work-related safety equipment, repairs and maintenance to households and appliances, professional services, airline fares and more. Even funeral services will come under the HST.
On all of those exempt items, the HST will result in a seven per cent tax increase next July 1. That’s a huge tax grab by a government that has claimed it is against higher taxes.
Back in 2001, when the Liberal government dropped income and business tax rates within hours of being sworn in, Premier Gordon Campbell said that reduced tax bills would help to stimulate the economy. Eight years and two elections later, the tune has changed — because now, Finance Minister Colin Hansen says the HST is “the single biggest thing we can do to stimulate the economy.”
Hansen’s argument is based on the notion that businesses will pay $1.9 billion less in taxes because they will be able to claim back the tax they pay. In theory, this will result in lower prices, and consumers will benefit. We will need to see what happens on that point.
In the short term, however, the government is lifting money from the wallets of individuals, and handing that money to business interests.
A sales tax is efficient, in that it is hard to cheat. But it is also regressive, as lower-income individuals pay the same rate as those in the higher income brackets. The tax shifts more of the burden onto those less able to pay.
Hansen swears the tax was not on the radar during the election campaign and the announcement two weeks ago was based on discussions held since the May 12 vote.
That is disturbing, and not just because the premier specifically said before the election that his government would not introduce the HST.
It defies belief to believe the tax went from nowhere to announcement in less than 10 weeks. We are left with two choices: Either the government was working on it before May 12, or it rushed the tax in with little preparation. Either way, the province loses — and the credibility of elected officials takes another body blow.
Voters were misled about the tax increases. The government has admitted that the $495-million deficit called for in its budget will actually be much higher, despite campaign claims that the number was firm.
And the Liberals didn’t mention coming cuts to programs and grants during the campaign; in fact, they did what they could to ensure the information did not get out.
The province will get $1.6 billion from the federal government as an incentive to make the tax switch, money that will help it come closer to balancing its own books.
All that said, the arrival of the HST is more evidence that our political system is ailing.
In February, Hansen delivered a budget that was so heavy on optimism that it was challenged almost immediately. It took the minister several months — until safely after the election — to admit that the critics were right.
During the campaign, the Liberals said they were against the HST and did not talk about the impact of the severe economic downturn. Their election platform, which does not mention the new tax, must be dismissed as irrelevant and inaccurate.
So we can’t believe the budget, and we can’t believe the election platform. Could it get worse than this?
Well, yes. As annoying as it was that the public was not consulted about the HST, the government made a mockery of the democratic process by announcing the tax increases, without any consultation, when the legislature was not sitting. Why do we have all those MLAs, anyway? Why did we have an election, if the only purpose was to choose some people who will have no say in how the government is run?
Campbell promised years ago that he would run an open, honest government. The HST is just the latest announcement to make a mockery of that promise.
© Copyright (c) The Victoria Times Colonist
BY VAUGHN PALMER, VANCOUVER SUN AUGUST 8, 2009
On the morning after winning a third term of government, Premier Gordon Campbell wasn’t long in declaring what victory meant for him and the B.C. Liberals.
“A clear mandate for managing the economy with stability and confidence as we move ahead,” he told reporters at the post-election press conference.
The economic downturn had tipped the odds against electoral change, a point that even Opposition leader Carole James was prepared to concede. “People felt they wanted someone with experience who had been in the premier’s chair already,” she told her own post-mortem session with the news media.
The economy trumps all. Ten weeks after the election, Campbell would invoke that mandate in justifying what could prove to be the most controversial decision of his third term.
“This is the biggest thing we can do to improve B.C.’s economy,” he claimed at the July 23 press conference where he announced the provincial sales tax would be merged with its federal counterpart to create a so-called “harmonized sales tax” of 12 per cent.
The press release went on to cite almost $2 billion in tax reductions and other savings for business, industry and the resource sector. At the same time, the Liberals claimed the shift would be “revenue neutral” for the provincial treasury.
Which meant — though they didn’t quite say it — that other taxpayers will have to pick up the slack once the new tax regime kicks in next July 1. For the most part, the extra burden will be shouldered by consumers, who will start paying the 12 per cent on formerly PST-exempt goods and services.
Thus, the unauthorized translation of “the biggest thing we could do for the economy” — whack individual British Columbians for hundreds of millions of dollars in new taxes.
“If they thought this was such a good idea for the economy,” as James said this week, “why didn’t they introduce this during the election campaign?”
But there is more to this tax shift than a government holding back on bad news until after the election. The merger also represents a 180-degree reversal of B.C. government philosophy on sales taxes.
As minister of finance during the Liberals’ second term, Carole Taylor was lobbied by the business community to support harmonization. A former chair of the Vancouver Board of Trade, she’d worked closely with the community over the years and understood its concerns.
She also heard the pitch from the federal government which then, as now, offered substantial transition funding to provincial governments that move to what Ottawa regards as a good-for-the-national-economy single sales tax.
But Taylor rejected the option, not once but several times. It would be too punishing to consumers. She didn’t want to give up the province’s numerous sales tax exemptions, many of them brought in for sound public policy reasons.
Revenue Minister Rick Thorpe voiced similar objections. Instead of moving toward harmonization, he launched a province-wide exercise to reform the provincial sales tax.
They were an interesting combination — Taylor, hailing from the liberal side of the party, Thorpe one of the leading right-wingers in the governing coalition, and both defenders of the PST as a tool for made-in-B.C. tax policy.
Both have since retired from provincial politics. And their vision of an independent tax policy is being retired as well, thanks to the Liberals’ post-election reversal on harmonization.
Unavoidable, insists the premier. With Ontario moving to the national sales tax regime, it was only a matter of time before B.C. had to make the move to preserve the competitiveness of the business sector, particularly the export industries.
But the Liberals are under no illusions that they will face a “hard sell” in persuading the public. Their main hope is to ride out the backlash and then reap the rewards of the anticipated economic recovery.
A classic, if cynical, political manoeuvre. You spend the first part of the mandate doing the rough stuff, then work at turning around before the next trip to the polls.
Which helps explain why the Liberals have so far rejected using any part of the $1.6 billion in federal transition funding to provide relief to consumers, a la Ontario where the provincial government is offering rebates of up to $1,000.
The HST begins to bite consumers in both provinces next July 1. But Ontario is on a tighter electoral timetable. That province’s Liberal administration is scheduled to face the voters again in 2011. The B.C. Liberals aren’t due until 2013.
Given the longer lead time, one can readily guess at the Campbell government strategy for survival. Use the federal transition money to maintain program spending, particularly in health care. Then work at balancing the budget, hope for better results on the economy in 2011 and 2012.
If all goes well — and what could possibly go wrong? as they say in the premier’s office — the Liberals would then be positioned to offer delayed relief to consumers. By, say, knocking a point or two off the HST on the eve of the next provincial election.
© Copyright (c) The Vancouver Sun