Christy Clark is the new Premier Designate

[Wilber]

Consider the budget shortfall trying to replace $1.6 billion in essentially free money from the feds. What kind of tax will replace it, and how much more will that cost?

Good question. The HST may be what we need but if it is so great, it could wait till it was properly debated instead of the deed being done behind everyones back, after claiming it was not on the agenda. If it is so great, why do we need to be bribed to bring it in? If the feds think it is so important, the money would have still been there six months later, after the people had been properly consulted.

I was just responding to the assertion that it was just 5% plus 7% intimating that there wasn't any difference between it and the two separate taxes. There is a huge difference. As far as the 1.6 billion goes, what price do we put on our ability to set our own tax policy? Do we give total control to the feds?

Edited April 22, 2011 by Wilber

[ToadBrother]

Good question. The HST may be what we need but if it is so great, it could wait till it was properly debated instead of the deed being done behind everyones back, after claiming it was not on the agenda. If it is so great, why do we need to be bribed to bring it in? If the feds think it is so important, the money would have still been there six months later, after the people had been properly consulted.

For that, the Feds have to share the blame. It seems it was they who put the time-limited offer on the table.

I was just responding to the assertion that it was just 5% plus 7% intimating that there wasn't any difference between it and the two separate taxes. There is a huge difference. As far as the 1.6 billion goes, what price do we put on our ability to set our own tax policy? Do we give total control to the feds?

So what you're saying is you don't mind a proper VAT, but just one not integrated with the Feds? I'm of two minds on that one. One of the major advantages of the HST is that it streamlines collection for both the government and business. For most businesses, GST/HST calculations are a one page form they do every three months. If they took in more than they spent, they send out a cheque for the difference, otherwise they get a cheque for the difference. The rules, while having a few wrinkles, are vastly simpler than the PST, which was a dog's breakfast of rules and regulations. As I've said previously, I've been through a few PST audits and never saw one where the end result was the same as the result going in.

So with HST we have one tax department that businesses deal with, one set of rules that tend to be fairly easy to understand. It's cheaper from an administrative perspective. Split it into two taxes, even if you retain the VAT aspects in the restored PST, well, you have two tax departments, the potential, if not outright likelihood that the two will diverge in rules and once again make the collection of these taxes increasingly complex, and in many ways, risky for businesses.

I'll be voting to retain the HST, myself. I was angry at how the Liberals brought it in, but the principles are gone now, the current leader had nothing to do with it, in other words those that should have been punished have been to the extent that we punish anyone in our system for bad policy. I was leaning towards the NDP, but then they chose that ethically-challenged hardliner Dix, and pretty much in that instant my decision was made.

[Pliny]

Yes. Rest assured, if this was high school, I would give you a "swirly" and then pull down you pants in front of the other kids.

I guess I will go hang myself now. Then you'll be sorry.

Maybe I could just get everyone to wear a yellow shirt to get the message across that bullying is not ok.

I think that will work to curb your bullying proclivities.

I don't know though. It's apparent you didn't get the pink shirt message.

Yeah, I bet that'll be a winning political strategy.

"Mr Speaker, the Premier is behaving like... a bully! b-b-b-but she said bullying was wrong!"

-k

She does have the bullying character necessary to politicians. You should give it another stab too, kimmy. You do have it in you, as you so aptly demonstrate.....and now you know it's a quality sometimes necessary to political expediancy.

Having said that don't get me wrong. A person does have to fight back at times and it may appear to be bullying. I would just like to make the point that there has to be a differentiation that is too often missed in the generalization of rhetorical demogoguery and sloganeering.

....just trying to pull up my pants.

Edited April 22, 2011 by Pliny

[Wilber]

For that, the Feds have to share the blame. It seems it was they who put the time-limited offer on the table.

Yes they do have to share the blame, neither of them showed any consideration for public consultation on one of the biggest tax changes in our history, but it was up to Campbell and Hansen to stick up for this province and its people. They should have told the feds that due process would happen and if an HST was so important to them, they could wait. The feds dangled a carrot in front of them and they couldn't resist. They fell for the bribe, the public didn't and that is why we are having a referendum.

So what you're saying is you don't mind a proper VAT, but just one not integrated with the Feds? I'm of two minds on that one. One of the major advantages of the HST is that it streamlines collection for both the government and business. For most businesses, GST/HST calculations are a one page form they do every three months. If they took in more than they spent, they send out a cheque for the difference, otherwise they get a cheque for the difference. The rules, while having a few wrinkles, are vastly simpler than the PST, which was a dog's breakfast of rules and regulations. As I've said previously, I've been through a few PST audits and never saw one where the end result was the same as the result going in.

So with HST we have one tax department that businesses deal with, one set of rules that tend to be fairly easy to understand. It's cheaper from an administrative perspective. Split it into two taxes, even if you retain the VAT aspects in the restored PST, well, you have two tax departments, the potential, if not outright likelihood that the two will diverge in rules and once again make the collection of these taxes increasingly complex, and in many ways, risky for businesses.

So why not try and fix the PST if it is so complicated? I understand that an HST is much easier to administer for business but I also understand that it makes my cost of living higher. Hence my dillema and I think a lot of people are looking a it the same way.

I'll be voting to retain the HST, myself. I was angry at how the Liberals brought it in, but the principles are gone now, the current leader had nothing to do with it, in other words those that should have been punished have been to the extent that we punish anyone in our system for bad policy. I was leaning towards the NDP, but then they chose that ethically-challenged hardliner Dix, and pretty much in that instant my decision was made.

I don't know how I will vote on the HST yet. I can't believe I would ever say this but I was also considering the NDP this time around. Their choosing Dix put an end to that. Idiots. Don't know who to vote for now.

[Handsome Rob]

Good question. The HST may be what we need but if it is so great, it could wait till it was properly debated instead of the deed being done behind everyones back, after claiming it was not on the agenda. If it is so great, why do we need to be bribed to bring it in? If the feds think it is so important, the money would have still been there six months later, after the people had been properly consulted.

I was just responding to the assertion that it was just 5% plus 7% intimating that there wasn't any difference between it and the two separate taxes. There is a huge difference. As far as the 1.6 billion goes, what price do we put on our ability to set our own tax policy? Do we give total control to the feds?

I entirely agree.

But at this point, is it relevant any more? I'd say they learned there lesson; the leader had to quit, Hansen may be done, they stand to lose a lot more at the next election. Hopefully people have learned for next time.

As far as the clean up goes, getting rid of the HST at this point just seems foolish. It won't punish the BC Liberals any more, it will punish the taxpayers.

I fully intend to vote to retain it as well.

[ToadBrother]

So why not try and fix the PST if it is so complicated? I understand that an HST is much easier to administer for business but I also understand that it makes my cost of living higher. Hence my dillema and I think a lot of people are looking a it the same way.

I don't think the increases to the cost of living are that great, but let's say for the sake of argument that Clark went to the Feds and said "We want to drop the Provincial portion a point and bring back some of the exemptions that were present under the PST." I can't imagine a Federal government, regardless of who it might be by the summer, is going to say no.

The fact of the matter is that most economists feel VATs are far superior to traditional sales taxes; easier to administrate, fairer and far more responsive to economic conditions than other taxes. Yes, up front, particular when changing from another tax regime, VATs probably will up costs of living, although in BC it was pretty minor, since the bulk of purchases that were exempt prior to the HST were still exempt after the fact. In the long run VATs are better for the economy as a whole, but it's not the kind of thing one should expect instantaneous results from.

So with the possibility of tinkering with the rate and with exemptions, would you reconsider the HST?

[Wilber]

So with the possibility of tinkering with the rate and with exemptions, would you reconsider the HST?

It has to be considered anyway but that may be what will have to happen in order to sell it.

VATs probably will up costs of living, although in BC it was pretty minor, since the bulk of purchases that were exempt prior to the HST were still exempt after the fact.

It has a major impact on the cost of anything that has a large labour component.

[ToadBrother]

It has to be considered anyway but that may be what will have to happen in order to sell it.

I'm hoping. I really do not think the HST tax regime is that bad. Maybe it can be made more equitable, but at the end of the day HST saves businesses money, and in the case of some of the major industries like forestry, that's a big deal and not something to be discarded just because of a populist revolt.

It has a major impact on the cost of anything that has a large labour component.

Yes, which is why restaurants were pretty pissed off. But considering the high prices these guys charge (it cost me and my wife $30 before taxes for two burgers, fries and pops the last time we went out), I'm not feeling terribly charitable.

[Smallc]

Yes, which is why restaurants were pretty pissed off. But considering the high prices these guys charge (it cost me and my wife $30 before taxes for two burgers, fries and pops the last time we went out), I'm not feeling terribly charitable.

Yeah, I wish retail businesses could charge the same markup as restaurants.

[kimmy]

Yes, which is why restaurants were pretty pissed off. But considering the high prices these guys charge (it cost me and my wife $30 before taxes for two burgers, fries and pops the last time we went out), I'm not feeling terribly charitable.

That better be one tasty burger...

-k

[ToadBrother]

That better be one tasty burger...

-k

That's the worst part. They weren't really all that much better than what I could have got for ten bucks less at McDonalds, and the bloody place doesn't even have decent homecut fries, just frickin' McCains Superfries. My wife noted that for $10 she could have gone out, bought some hamburger, some decent buns and some potatoes and we could have had a BBQ that would have tasted ten times better, and the tip... well, let's just say I wouldn't have been grumbling about it

[kimmy]

That's the worst part. They weren't really all that much better than what I could have got for ten bucks less at McDonalds, and the bloody place doesn't even have decent homecut fries, just frickin' McCains Superfries.

I treated two visiting friends to dinner at my local "Fatburger" and got 3 good-as-homemade burgers, a big basket of very good fries, and 3 bottomless soft drinks for about $30.

My wife noted that for $10 she could have gone out, bought some hamburger, some decent buns and some potatoes and we could have had a BBQ that would have tasted ten times better, and the tip... well, let's just say I wouldn't have been grumbling about it

My landlord always makes some comment about royalty when I barbecue steaks or ribs or shrimp or crab legs in the back yard. This coming from a guy who spends probably over $100 every week on pizzas and fast-food meals for himself, his wife, and their toddler.

-k

[Wilber]

I'm hoping. I really do not think the HST tax regime is that bad. Maybe it can be made more equitable, but at the end of the day HST saves businesses money, and in the case of some of the major industries like forestry, that's a big deal and not something to be discarded just because of a populist revolt.

Yes, which is why restaurants were pretty pissed off. But considering the high prices these guys charge (it cost me and my wife $30 before taxes for two burgers, fries and pops the last time we went out), I'm not feeling terribly charitable.

It is a big deal for some companies but when it comes to exporting companies it is well to remember that you will actually be subsidizing the cost to those export customers by transferring those taxes from companies to BC consumers.

Eating out is optional, putting a roof on my home is not. What does a roofing company have for overhead that they can write off the HST on other than a few ladders, yet all that labour to replace my roof is now taxed at an additional 7%.

Say a some one man operation goes out and spends 100 grand on something like a back hoe which has a ten year life span. the PST component of the HST on that machine is $7,000. Say the tax component of parts bought over the next ten years is $10,000 for a total of $17,000. Say he rents it out for $100 an hour including operator. Every hour that machine is rented out for the next ten years is now subject to an additional $7 tax. If it is rented out for 1000 hours a year over it's 10 year lifespan, that comes to $70,000 in additional taxes collected.

[TimG]

If it is rented out for 1000 hours a year over it's 10 year lifespan, that comes to $70,000 in additional taxes collected.

That is $70,000 that is not collected from retail customers. The HST shifts taxes from goods to services. This means people will pay more for services. If you happen to buy more services than goods then that sucks but in the long run it is much better for the economy.

[Wilber]

That is $70,000 that is not collected from retail customers. The HST shifts taxes from goods to services. This means people will pay more for services. If you happen to buy more services than goods then that sucks but in the long run it is much better for the economy.

Of course it is, shifting tax to the retail customer is what the GST is all about. Do you think a construction company is just going to eat that 70 grand and not pass it on to their customer? The tax on goods isn't going anywhere, it is just being added to services. It may or may not be good for the economy but the average Joe will be paying more tax for sure.

[TimG]

It may or may not be good for the economy but the average Joe will be paying more tax for sure.

The effect on inflation is a one time jump of <0.7% (which takes into account the mix of services and goods that people buy). The actual revenue brought in by the government is the same.

[msj]

Wilber, I think you are forgetting that the rental of that machinery is most often done to general contractors.

So, we have the excavator guy who collects HST and sends it to the government.

We have the general contractor who pays the HST for the rental and deducts it from the HST he charges on the sale of the new house/building/whatever.

That is, it's a wash.

So, no, it is not necessarily more tax other than the tax being charged on the new house (less any rebate to the homeowner).

Since one can choose to buy new (HST please) or used (no HST) people are choosing to pay HST, or not.

[Wilber]

The effect on inflation is a one time jump of <0.7% (which takes into account the mix of services and goods that people buy). The actual revenue brought in by the government is the same.

Sorry but I just don't believe that. Any jump is in perpetuity and I don't believe it will be revenue neutral.

[Wilber]

Wilber, I think you are forgetting that the rental of that machinery is most often done to general contractors.

So, we have the excavator guy who collects HST and sends it to the government.

We have the general contractor who pays the HST for the rental and deducts it from the HST he charges on the sale of the new house/building/whatever.

That is, it's a wash.

So, no, it is not necessarily more tax other than the tax being charged on the new house (less any rebate to the homeowner).

Since one can choose to buy new (HST please) or used (no HST) people are choosing to pay HST, or not.

No, the excavator guy collects the HST and sends it to the government. He collects it from the contractor who then collects it from you. He doesn't deduct anything, you the customer pays. Instead of paying PST and GST on the materials that went into the house, you are now paying an additional 7% on the labour that went into building it.

The lack of HST on older homes will just increase their value. Great if you are selling your place as long as you aren't buying new.

[TimG]

Sorry but I just don't believe that. Any jump is in perpetuity and I don't believe it will be revenue neutral.

A one time jump means prices increase one year but not the next. That means it will have little effect on disposable income although individual experiences will vary.

Back in 2008 the PST was expected to bring in 5,857 million in 2011.

http://www.bcbudget.gov.bc.ca/2008/bfp/2008_Budget_Fiscal_Plan.pdf

Today HST estimate for 2012 is 5,820 million.

To compare the corporate tax from 2008 budget is 1,193 million

The estimates for 2012 1,571 million.

http://www.bcbudget.gov.bc.ca/2011/estimates/2011_Estimates.pdf

In other words, personal and corporate taxes are expected to jump over 2008 estimates due to inflation and economic growth

yet the PST/HST revenue is the same.

That tells me the taxes are revenue neutral no matter how much you would like to believe otherwise.

Edited April 23, 2011 by TimG

[msj]

No, the excavator guy collects the HST and sends it to the government. He collects it from the contractor who then collects it from you. He doesn't deduct anything, you the customer pays. Instead of paying PST and GST on the materials that went into the house, you are now paying an additional 7% on the labour that went into building it.

The lack of HST on older homes will just increase their value. Great if you are selling your place as long as you aren't buying new.

Re-read what I wrote - the contractor collects it from me when I buy the house from him - which is what I had stated and is the real point when the government is actually going to be getting some money - i.e. more tax revenue.

However, the tax between the excavator and contractor is always a wash.

Given the HST new home rebate (of which I have already filed 3 for clients), when I do the math (and I have done it since I have accounting experience on an $11 million building) if the house is less than $625,000 then the buyer is only slightly worse off for the HST (since PST was embedded in the materials for the house).

In fact, I have seen contractors charge to clients (on a cost plus basis) a 10% mark-up on the materials (with the PST still in on the price - so, the client then paid GST of 5% on top of the materials including the 7% PST).

From this point of view, some people buying a new home from a builder are actually paying less than they would have under the PST regime (and wouldn't have a clue that they were - which is too funny, imo).

------------------------

I believe Tim G's numbers above about this tax being pretty darn close to "revenue neutral."

Yes, this means that consumers, as a group, are in fact paying more since most businesses are not paying HST. No doubt it's a tax shift.

But the positive side is that this encourages more investment and growth which creates more jobs which increases wages which helps people pay more taxes so the government can spend that money on the people.

[Wilber]

A one time jump means prices increase one year but not the next. That means it will have little effect on disposable income although individual experiences will vary.

Inflation is compounding just like interest. If you inflate my $100 to $102, the next batch of inflation is on $102 not the original $100 and so on after that. I've believed for some time that the greatest single driver of inflation is government spending. Nothing has happened to change that opinion.

However, the tax between the excavator and contractor is always a wash.

So what, the final purchaser always pays in the end and now he is being taxed on labour as well as materials.

Given the HST new home rebate (of which I have already filed 3 for clients), when I do the math (and I have done it since I have accounting experience on an $11 million building) if the house is less than $625,000 then the buyer is only slightly worse off for the HST (since PST was embedded in the materials for the house).

True with new homes but what if you buy a used one and want to renovate? All the labour is now taxed at an additional 7%.

Yes, this means that consumers, as a group, are in fact paying more since most businesses are not paying HST. No doubt it's a tax shift.

Exactly.

But the positive side is that this encourages more investment and growth which creates more jobs which increases wages which helps people pay more taxes so the government can spend that money on the people.

In some parts of the economy, yes, in others, it's a killer, but either way, the consumer pays more.

[TimG]

Inflation is compounding just like interest. If you inflate my $100 to $102, the next batch of inflation is on $102 not the original

2% of 0.7% is nothing. Your are splitting hairs. The macro-economic impact on inflation is next to zero.

In some parts of the economy, yes, in others, it's a killer, but either way, the consumer pays more.

And gets lower prices on goods and more economic activity in return. I think it is good trade off.

[Wilber]

2% of 0.7% is nothing. Your are splitting hairs. The macro-economic impact on inflation is next to zero.

Compounded over 20 years it becomes something. It's like being a little bit pregnant.

And gets lower prices on goods and more economic activity in return. I think it is good trade off.

Possibly lower prices on some goods but higher labour costs. More activity in some parts of the economy, less in others. Whether it is a good trade off depends on where your income comes from and what your expenses are.

[Smallc]

Compounded over 20 years it becomes something. It's like being a little bit pregnant.

It isn't going to be compounded. It's a jump once and then an increase at what the rate otherwise would have been for eternity.

Edited April 23, 2011 by Smallc