The harmonized sales tax is officially extinguished.
Results of the HST referendum were released late Friday morning indicating that 54.73 per cent of the province voted to scrap the tax in favour of the GST/PST.
According to Elections B.C., 881,198 of the 1.6 million voters who participated in the referendum voted to extinguish the HST.
In Greater Victoria, 105,937 of registered voters returned their referendum packages.
Only one of the five local electoral districts, Oak Bay-Gordon Head, which also happens to be the only Liberal-held riding, saw a majority vote to keep the HST.
All four NDP electoral districts voted to extinguish the tax, with the most anti-HST turnout in Esquimalt-Royal Roads (57.96 per cent voted ‘yes’) and Victoria-Beacon Hill (57.73 per cent).
Victoria-Beacon Hill MLA Carole James says she’s “extremely pleased” to see such a strong, definitive result.
“It’s a very clear message from the public, to go back to the PST and GST. It’s a good day for democracy,” she said. I want to hear the premier call the Legislature back this fall. … I think, if anything, this vote says to the Liberals, ‘It’s time to get back to work.’ I want to see legislation introduced that will bring back the GST and PST in a smooth process in a way that works for small businesses and families.”
A relatively tight vote, ultimately 54.73 per cent to 45.27 per cent, was what most B.C. residents and politicians were predicting – a stark contrast to the public’s perception of the tax after it was announced on July 23, 2009.
In August 2009, one month after the HST was announced, an Ipsos Reid poll determined that 85 per cent of British Columbians opposed the tax, while only 12 per cent supported harmonization. (Three per cent of respondents were unsure.)
Michael Prince, Lansdowne professor of social policy at the University of Victoria, says the numbers are perhaps indicative of the old political adage that “time will heal all; people will get used to the tax.” The numbers, however, didn’t shift enough to favour the Liberal government.
“This will be seen as a victory for those who were outraged at the way this was brought in and dumped on them, and how this was planned and announced,” he said. “There could’ve been many other ways the government campaigned or marketed this tax besides the little stick men and the promise of a far-off two-per-cent tax cut.”
The implementation of the tax is what angered a lot of voters, he said. Case in point: Oak Bay-Gordon Head was the first stop in the Fight HST’s recall campaign, which attempted to oust Liberal MLA Ida Chong in December 2010.
She became the target “because she supported the deceptive introduction of the Harmonized Sales Tax and refuses to represent the clear wishes of her constituents,” read the recall application.
Ultimately petitioners only gathered 8,818 of the necessary 15,368 signatures (40 per cent of registered voters in the riding) from Oak Bay-Gordon Head residents.
“The Liberals said they opposed the HST in the last election campaign and then sprang it on unsuspecting voters,” NDP leader Adrian Dix said in a statement following the announcement. “Yes, British Columbians were angry at a Liberal government that had misled them repeatedly for more than two years. But they also understood that the HST would take money out of their communities, out of local business and make it harder to make ends meet.”
Prince says the fact that extinguishing the HST saw a majority vote in more than 60 of the province’s electoral districts – many of which are Liberal-held –should give the sitting government “sober second thoughts” about calling an early election.
It’s a victory for former premier Bill Vander Zalm, who spearheaded the Fight HST campaign, he says.
“(The Fight HST campaign has) been working on this for a good year-and-a-half or longer. When it first started out, people discounted the old premier and underestimated the discontent of British Columbians,” Prince said. “As most Canadians are usually accepting of the tax policies governments roll out, this is a pretty unique day in B.C. political history.”
Premier Christy Clark this week said she was bracing for rejection of the HST. Clark’s government has been working long hours to prepare what she calls “plan B” for returning the province to its former provincial sales tax.
Friday afternoon she spoke to the media and stressed that the way the HST was implemented – suddenly and without public consultation – could’ve been its downfall.
“I think that if the HST had been introduced in a different way it may have ultimately been met with a different reception from British Columbians,” she said. “It’s fair to say that’s the one hypothetical you can be certain about.”
Chong, a former accountant, said she believes the tax failed partly because explaining tax policy to the public is “complicated and … hard to understand.”
“I think small businesses, as they go back to the old style, they’ll be asking, ‘Is this the right decision, after all?'” Chong said. “But that’s no longer important. The decision has been made.”
Her electoral district was one of 25 (out of 85) in the province that saw greater support for the ‘No’ side than the ‘Yes’ side.
“It’s a vote we all have to respect. That’s the best way to say it to the 51 per cent (in my riding) who voted to keep it,” she said. “They need to know that around the province, that’s not what was felt. That’s the beauty of having a democracy, I guess – everyone gets to express their vote.”
A statement from the Ministry of Finance an hour-and-a-half after the results were released read: “An action plan has been established to guide the transition process and help ensure an effective and orderly transition from the HST to the PST plus GST system in B.C. The PST will be reinstated at seven per cent with all permanent PST exemptions. The Province may make some common sense administrative improvements to streamline the PST.”
Saanich South MLA Lana Popham is thrilled that the former PST exemptions will be back, especially on bicycles, something she was advocating for immediately after the HST was announced.
“The problem that people were expressing to me is they didn’t like the way that British Columbia was losing control over their tax system. People were quite pleased with the exemptions in place – it was a reflection of our values,” she said. “The idea that we’re able to exempt green options was something people were proud of.”
Finance Minister Kevin Falcon has estimated that scrapping the HST will cost the province about $3 billion in the next few years. The B.C. government will have to borrow to pay back the $1.6 billion transition fund from the federal government, with a payment schedule that will have to be negotiated with Ottawa.
A provincial sales tax administration and audit centre will also have to be re-established, and businesses across the province will have to change their cash registers and accounting systems for the second time in two years.
The finance ministry also projected that the HST would bring in an additional $600 million in revenues in each of the next two years, based on economic growth and extending the seven-per-cent provincial portion of the sales tax to a variety of services covered by the federal goods and services tax.
It’s expected to take between 18 months and two years for the province to revert back to the former GST/PST tax system.
– with files from Tom Fletcher
Greater Victoria electoral district results
Are you in favour of extinguishing the HST (Harmonized Sales Tax) and reinstating the PST (Provincial Sales Tax) in conjunction with the GST (Goods and Services Tax)? Yes/No
Esquimalt-Royal Roads: Yes- 57.96% No- 42.04%
Oak Bay-Gordon Head: Yes- 48.60% No- 51.40%
Saanich South: Yes- 52.52% No- 47.48%
Victoria-Beacon Hill: Yes- 55.76% No- 44.24%
Victoria-Swan Lake: Yes- 57.73% No- 42.27%
For complete riding results visit: http://electionsbcenr.blob.core.windows.net/electionsbcenr/REF-2011-001.html