British Columbians have voted to scrap the province’s controversial
harmonized sales tax, according to the results of a binding,
Elections B.C. announced on Friday morning that 54.73 per cent of the
1.6 million British Columbians who cast a ballot in the mail-in
referendum voted to get rid of the tax and 45.27 per voted to keep it.
The province has yet to announce how the roll back will take place,
but the government has previously said repealing the tax will put a $3
billion hole in the B.C. budget, if it has to repay the federal
government the $1.6 billion it received to introduce the HST.
B.C. leaders react to vote
B.C. NDP opposition leader Adrian Dix welcomed the result.
"We have good news: the people won over the arrogance of the Liberal
government and its powerful friends. It is a victory for fairness," said
"For a decade, the Liberal Party has shifted the tax burden onto B.C.
families. A return to the PST will be good for communities, good for
families and good for small business. It will make life a little bit
more affordable for working families. It will also ensure that British
Columbia has control over its sales tax policy, now and in the future,"
The office of Federal Finance Minister Jim Flaherty said the federal
government will work with B.C. to roll back the tax, which has been
administered by the officials in Ottawa.
"We respect the decision made by the people of British Columbia. We
will work with the Government of B.C. on the transition. The provincial
government has already repeatedly acknowledged that the $1.6 billion in
transitional assistance will be recovered as per the agreement," said a
statement issued by Flaherty's office.
Jim Sinclair, the president of the B.C. Federation of Labour called the vote a victory for the people of B.C.
"My reaction is good news for British Columbia. People voted for tax
fairness and against governments who lie to them, and going forward we
can do the things we need in this province and corporations will
continue to pay their share of the taxes in British Columbia. It's a
victory for people and multi-million dollar advertising campaigns
weren't enough to convince people to vote against their own best
interests," said Sinclair.
Helmut Pastrick, chief economist with Central One Credit Union and a
member of the B.C. Economic Forecast Council said it would have a
negative impact on the economy.
"I think overall it's somewhat negative for the B.C. economy longer
term. Business investment will be somewhat more muted. Certainly in the
short term, there'll be some mild benefit to consumers, more
discretionary income.... But longer term this is a step backwards for
Adrienne Montani with the coalition for Poverty Reduction in B.C. said the vote would help lower income people.
"It means that in the short term anyway if we go back to the old
regime, there are a number of things that are essential expenses that
lower income people must spend on that will no longer be subject to an
extra tax. So it's probably a good news story for their pocket-books at
the moment," said Montani.
John Winter, the president and CEO of the B.C. Chamber of Commerce was concerned by the result.
"Significant disappointment, a long hard battle that was unsuccessful
and certainly it's going to have a profound impact on the economy of
this province and the time it's going to take over the next 18 months to
revert back to the situation with the PST and GST combination and items
that were subject to taxation under the provincial scheme, it's going
to be a very long period of uncertainty," said Winter.
Petition led to referendum
Former premier Gordon Campbell announced the surprise move to a harmonized sales tax in 2009, following his victory in the May provincial election.
The surprise announcement sparked widespread outrage and a campaign
to repeal the HST spearheaded by former B.C. premier Bill Vander Zalm,
who argued B.C. consumers would ultimately pay more under the tax.
Vander Zalm's popular campaign to repeal that tax ended up collecting
more than 700,000 signatures on a petition to trigger a referendum.
The public backlash over the tax is also believed to be responsible
for Campbell’s early retirement as premier. But before his resignation
last fall Campbell said the results of the referendum would be binding.
Since July 2010 the HST has combined the five per cent federal GST
with the seven per cent provincial sales tax for a harmonized 12 per
Consumers pay an extra seven per cent tax on restaurant meals,
airline tickets, funerals and haircuts — all items that were previously
exempt from the PST.
As part of a campaign to keep the tax, Premier Christy Clark promised
to cut the HST to 10 per cent if British Columbians voted to keep it.
The next 18 months or so are going to be interesting and I'm keen on watching what will happen to the Liberals (and Clark)