After three long years of angst, B.C.’s provincial government is doing the right thing…
By Peter Simpson
Mention the acronym HST in B.C. and the immediate reaction will be to LOL or scream OMG.
In my more than 46 years in and around the media, I can’t recall any public-policy rollout that has befuddled, aggravated and divided taxpayers as much as the harmonized sales tax.
By the time the battered HST retreats to the GST/PST system on April 1, 2013—April Fools Day—four excruciatingly long years will have passed—enough time to earn a university degree.
Harken back to spring, 2009. The finance ministers of Canada and Ontario inked an agreement to harmonize the federal and provincial sales taxes in the Yours-to-Discover province.
Toronto’s BILD called the HST “a massive tax grab.” OHBA said it was a “poison pill.” CHBA joined both associations in expressing members’ concerns by sending letters to Prime Minister Stephen Harper, urging him to ensure harmonization was neutral for new homes and renovation.
Meanwhile, on the Wet Coast, politicos were readying themselves for a May provincial election. The Greater Vancouver Home Builders’ Association (GVHBA) sent a questionnaire to all candidates, asking them to state their positions on tax harmonization.
The NDP responded that harmonization was not in its plans. The Green party did not respond. The Liberals wrote that harmonization would “make it harder for future provincial governments to lower or raise sales tax rates, which reduces flexibility. In short, a harmonized GST is not something that is contemplated in the BC Liberal platform.”
Soon afterwards, the Liberal party formed another majority government.
A month later, federal and provincial finance ministers met in Meech Lake, where, you can bet, they discussed the $4.3 billion Ontario stuffed into its pockets for jumping on the HST gravy train.
B.C.’s then-finance minister, Colin Hansen, must have salivated at the prospects of securing a similar sweet deal for his deficit-conscious government. On June 6, 2009, I wrote about all this drama in my Vancouver Sun column, in which I warned readers to “just watch how this story plays out.”
They didn’t have to wait long. On July 23, 2009, then-premier Gordon Campbell (now the Canadian High Commissioner to the United Kingdom) announced to great fanfare that B.C. had signed a memorandum of understanding on HST. Included in the agreement, right up there in the second paragraph, was the root of it all: The feds would toss $1.6 billion into B.C.’s revenue bucket.
There you have it. First the government said it wouldn’t, then it did. That really stung.
The home building industry is a significant contributor to the provincial economy, yet the HST application on new housing was referenced, in afterthought fashion, way down in paragraph eight of the government news release—two paragraphs below feminine hygiene products.
The HST increased the disparity between existing and new homes, where a great number of jobs are created. And the rebate threshold was set at $400,000, a ridiculously low amount in high-priced areas of B.C. such as Greater Vancouver, Victoria and the Okanagan.
After much prodding by GVHBA, CHBA-BC, Urban Development Institute and other regional associations around the province, the threshold was raised to $525,000. One battle was won, but the HST war raged on.
I wrote many columns on HST. Some folks would call it relentless. The media called often in search of commentary. While acknowledging HST was beneficial to some sectors, I expressed emphatically that HST needed major adjustments related to new homes and renovation. And kudos to CHBA-Victoria’s Casey Edge, who was active in the media in the provincial capital.
On July 1, 2010, HST was implemented. Despite this reality, HST supporters and opponents ferociously debated and denigrated each other. Millions were spent on rival advertising campaigns.
A year later, during June and July 2011, British Columbians voted in a referendum to extinguish the HST. Given the circumstances, it wasn’t surprising. When a government asks voters who believed they were hoodwinked to choose between paying more tax or less tax, what result could be expected?
After all, ‘fessing up before an issue festers is preferable to ladling out refreshing purple Kool-Aid to an unsuspecting electorate. (Kids, ask your parents about Jonestown.)
GVHBA, without comment or bias, unlike some other business associations, presented to its 730 member companies the pros and cons of HST and asked them to vote their conscience. Associations—national, provincial and local—must always remain non-partisan. It is sheer folly to do otherwise.
The referendum result fuelled uncertainty and anxiety. Prospective home buyers and homeowners contemplating renovation sat on their wallets, waiting for clarity on the transition rules.
B.C.’s current finance minister, Kevin Falcon, met with GVHBA leaders in November. He said he was working expeditiously to release the transition rules, that he was waiting for the feds to complete their work, and that he was as frustrated as we were.
On February 17, 2012, industry leaders were summoned to Victoria, where Falcon announced the transition rules, and much more. Finally, after all the angst, the provincial government did the right thing.
Effective April 1, 2012, the new housing rebate threshold will rise from $525,000 to $850,000, capturing 90 per cent of all new homes in the province. The rebate was hiked from $26,250 to $42,500. Moreover, new secondary recreational homes will be eligible as well, providing a boost to the prospects of beleaguered builders outside the Greater Vancouver and Capital regional districts.
Four days later, on February 21, 2012, Falcon presented his budget speech. Included was a measure that provides relief for first-time buyers of newly built homes. Property virgins can apply for a refundable income tax credit of up to $10,000. This welcome measure will also create construction jobs.
However, we were disappointed that, apart from a $1,000 tax credit for seniors to install mobility assists in their homes, renovation, worth $7.6 billion to B.C.’s economy this year, was not addressed.
We will continue to oppose provincial, regional and municipal policy that doesn’t make sense, and support policy that does. Membership, and righteous persistence, can indeed make a difference.
Peter Simpson is the president and chief executive officer of the Greater Vancouver Home Builders’ Association.