XPost: bc.politics, van.general, vic.general   
      
   April 1, 2010   
   HST puts B.C. Liberals between rock, hard place   
   By Justine Hunter   
   From Friday's Globe and Mail   
   Tax still a tough sell, even to some the government thought it had placated   
   While Colin Hansen was in Victoria earlier this month preparing the   
   legislation to make   
   way for the harmonized sales tax, Douglas Day was in Squamish working out the   
   final   
   details for an $18-million housing development just outside his office window.   
      
   The Finance Minister and the developer once worked on the same side   
   politically. But as   
   Mr. Hansen introduced the law that he says will create new jobs, Mr. Day   
   pulled the plug   
   on a project that would have put a hundred tradespeople to work.   
      
   "It's 100 per cent because of the HST," said Mr. Day, president of University   
   Heights   
   Development Corp. "It forced me to stop and get the accountants out."   
      
   Here's what he concluded: By the time the 25 family homes would be ready for   
   market, the   
   HST would put them out of reach of too many potential buyers.   
      
   So his risk was increasing. And for what potential profit? On a $725,000 home,   
   his company   
   could expect to earn $20,000. The total tax bill, meanwhile, would be in   
   excess of   
   $160,000.   
      
   "Nice work for the government, if we were dumb enough to go ahead," he said.   
      
   While he joins a crowded field of HST opponents, Mr. Day is especially bitter   
   because he   
   thought helping elect Gordon Campbell's government would improve the business   
   climate.   
      
   "I stumped for Gordon Campbell when he ran for the leadership," he said. "I   
   went   
   door-knocking with Colin Hansen. This is not someone I'm going to war with   
   lightly."   
      
   Oddly, Mr. Hansen believed the home builders were one group he was no longer   
   at war with,   
   after he agreed to raise the threshold for new homes so that those priced at   
   $525,000 or   
   less would not be subject to additional tax.   
      
   Peter Simpson, head of the Greater Vancouver Home Builders' Association, said   
   his members   
   are still angry. The industry is just starting to recover from a bad year due   
   to the   
   recession; now the HST, combined with rising interest rates and tougher   
   mortgage rules,   
   could drive away new homebuyers in droves. "It might create the perfect storm   
   of buyer   
   resistance in July," he said. If it does, Mr. Day won't be alone in cancelling   
   new   
   projects.   
      
   New taxes are never easy to sell, but Mr. Hansen's government has managed to   
   make new   
   enemies, including Mr. Day, because of a spectacularly poor rollout.   
      
   His tax is going over about as well as the introduction of the GST. Brian   
   Mulroney brought   
   in the goods and services tax after winning the 1988 federal election. And   
   voters   
   demonstrated their capacity to hold a grudge, almost wiping the Conservatives   
   off the   
   political map in 1993.   
      
   By comparison, Ontario's government is introducing the HST at the same time as   
   B.C. with a   
   fraction of the grief. Not that Premier Dalton McGuinty's Liberals haven't   
   been bruised by   
   the issue, but the rollout in Ontario shows some marked differences from B.C.   
   The Ontario   
   HST was crafted as part of a tax reform package that included property and   
   sales tax   
   credits and personal income tax reductions. Plus, Ontario tax filers will see   
   a series of   
   three cheques, offered as a buffer to the transition.   
      
   Mr. McGuinty survived an about-face on taxes once before. After campaigning in   
   2003 on a   
   commitment not to raise taxes, he brought in a new health premium - and was   
   re-elected in   
   2007.   
      
   Mr. Hansen can't count on the same level of forgiveness here. "Politics in   
   B.C. are more   
   polarized," the Finance Minister said in an interview. "There are so many   
   groups out   
   there, who, if Gordon Campbell says it's white, they'll say it's black   
   regardless of what   
   the facts are."   
      
   While he complains about disinformation on the HST, the facts themselves are a   
   tough sell.   
      
   It's not just the price of new homes that will rise on July 1. Such everyday   
   items as   
   cable bills, bicycles, newspapers, restaurant meals, haircuts and household   
   repairs will   
   be subject to a higher sales tax in B.C. Mr. Hansen has offered some   
   low-income rebates,   
   but doesn't have any more tax room to sweeten the deal.   
      
   He has tried to explain how businesses will recover the tax they pay on their   
   purchases,   
   so prices should eventually come down. But he concedes: "Most people, when you   
   talk about   
   the marginal effective tax rate on investment, their eyes glaze over."   
      
   Looking ahead to the next provincial election, Mr. Hansen and the B.C.   
   Liberals can only   
   hope that the promised benefits of the HST will make voters measurably less   
   cranky than   
   they are now.   
      
   "I expect three years from now, the HST will still be, by and large, unpopular   
   with most   
   consumers," he said. He figures the economy will be roaring along by then, but   
   he raises   
   the problem himself: "People won't make the connection that it's the HST that   
   actually   
   triggered the job creation and economic growth. The question is, what will   
   loom bigger in   
   people's minds?"   
      
   --- SoupGate-Win32 v1.05   
    * Origin: you cannot sedate... all the things you hate (1:229/2)