Wednesday, September 2, 2009

HST wound festers

In his blog Paying Attention, Paul Willcocks makes an interesting point about the impact of HST on ordinary citizens. The effect is larger than initially announced.

Paul offers The six things you need to know about this budget. The first is, "The February budget has been revealed as bogus." I suggest you follow the link to read all six.

Consider also these points:
  • The new budget predicts HST will raise $5.6 billion, up from PST's current $5 billion revenue;
  • Business will save $1.9 billion by recovering HST it pays;
  • Consumers therefore must replace the tax lost to business and contribute an extra $600 million, a total of $2.5 billion being consumers' new share of sales tax.
At the initial announcement, Premier Campbell and Minister Hansen stated the new HST would be revenue neutral. That is not what they actually expect according to the new budget so we can add that statement to the large stack politely marked "Disingenuous."

The promise that prices will decline broadly because of tax savings "pass-through" will be added to that large stack of lies as time passes. Price declines will not occur in any large proportion because much of the tax savings will be realized by producers who charge according to "world prices."

Almost all of British Columbia's $6 billion mineral production is consumed outside the province and priced, as forest products are, according to world markets. If Catalyst Paper pays less sales tax, don't expect them to lower the price of paper. And Shell won't lower the price of gas because refining costs less. Movie admissions won't reduce because producers save money. Cablevision rates won't decline. Transit fares, parking fees and tolls will stay the same or increase.

As Dana Carvey might have said about lower prices, "Ain't gonna happen."
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