Canucks & Clark fall short in big tasks

Premier Clark and Finance Minister Falcon say the return to PST will cost BC $3 billion and warn of required spending cuts and austerity for government programs and workers.

In addition to the $1.6 billion transition payment that Ottawa may want returned, Falcon says PST will collect $1 billion dollars less than it would under HST in the first two years, being fiscal 2014 and 2015. Additionally, the Minister says 18 months and hundreds of millions will be spent hiring staff and equipping offices to administer PST and training merchants to collect the tax. (Business people have poor memories.)

Falcon conveniently forgets his government’s pledge to reduce the HST rate. On May 26, Vancouver Sun reported:

“VICTORIA – If British Columbians vote to keep the HST in the referendum next month, the rate will be cut to 10 per cent by 2014, Finance Minister Kevin Falcon announced on Wednesday.

“The cut would be in two stages, to 11 per cent on July 1, 2012 and to 10 per cent on July 1, 2014.

“In addition, all families with children under 18 and lower income seniors will get by the end of the year a one-time transition cheque, which will be $175 for each child and $175 for seniors…”

Is the newly projected revenue shortfall based on the higher HST rate or the lower rates? Perhaps Liberals never had a real intention of dropping the percentage by two points because it was cynical Liberal truthiness aimed at influencing the referendum outcome. I’ve heard no steno in the corporate media ask the question.

In 2009, when former Premier Campbell and then Finance Minister Colin Hansen announced implementation of HST, they claimed this “single best thing” for business would save their corporate allies $1.9 billion. Liberals also claimed HST would be revenue neutral meaning that non-business consumers were expected to finance the billions in savings for Campbell’s friends.

Now, both Christy Clark and Kevin Falcon admit HST was not revenue neutral. They say indirectly that an extra half billion a year is being collected above the sum saved by corporate friends: an extra hit of $2.4 billion each year for consumers, almost none moderated by lower retail prices.

In 2009, Liberals were less than forthright about the origins, purposes and effects of HST, and they have been purposely inaccurate about many other subjects. In the wake of citizens rejecting their HST policy, dare we believe anything they tell us about provincial finances.

By the way, when people from the BC film industry claim the sector is at risk because of PST, don’t believe it. I worked at a senior level in the industry for 20 years and am familiar with how deceitful the stated values of BC film and video production really are. For example, if a $30 million feature is partly filmed in this province, nearly all of the costs (producers, directors, principal actors, writers, editors, distribution costs, etc.) are paid to people outside BC. Perhaps $3 million is spent in the province but the whole $30 million budget gets added to the value of BC production.

The film industry is like professional athletics and convention hosting. The public is asked to spend huge sums in subsidy or “lose the economic activity to somewhere else.” One jurisdiction plays subsidy leap frog with other locations while vast and uneconomic financial aid is heaped on unworthy recipients.