Thursday, May 27, 2010

Why (some of us) hate politicians

Gordon Campbell claims that HST will "encourage billions of dollars in new investment and lower costs on productivity."  Bill Phillips, Editor of the Prince George Free Press, in Why we hate politicians, asks:
If the harmonized sales tax is truly the “best thing we can do to stimulate the British Columbia economy,” why didn’t the Liberals institute it in 2001?

. . . There is no guarantee that the HST will stimulate the economy. I’m reminded of another columnist’s comment. Diana French, in talking about the end of the recession, stated she would be more inclined to believe it was so if the folks telling us the recession is over weren’t the same ones who didn’t see it coming in the first place.

The same holds true for the HST. I would be more inclined to believe that the HST is the single best thing we can to for the economy if the people telling us this is so weren’t the same ones who adamantly said the opposite for their first two terms in office.
The Black Press editorial is worth reading and I find it refreshing to see a common sense analysis instead of the usual repetition of BC Liberal talking points.

Chris Delaney, writing in the straight.com wonders why HST, if it is about to give British Columbia billions of economic growth, more jobs, higher wages and lower prices, is a common factor to troubled economies. Delaney points a finger at Canadian maritime provinces who were the leaders in employing HST but still lag as much as ever behind other provinces.

He also talks about Europe, where long established consumption taxes have resulted in strong economies with high growth, full employment, low consumer prices, declining national debt and falling taxes. Oh, wait.  Sorry, he didn't say that. He couldn't. By the way Chris, Greece already raised its tax to 21% from the rate you researched.

No, Europe has long relied on high consumption taxes because this tax is efficient, as economists like to remind us. Efficient, that is, in a perfect world of law abiding taxpayers. Any person who spends a little time in small town Europe knows that tax avoidance is a national sport in most countries. Nearly a quarter of the Italian economy goes untaxed, according to Italian Prime Minister Silvio Berlusconi. “What distinguishes Greece from the rest of the pack is the extent of tax evasion,” said Michael Massourakis, chief economist at an Athens-based bank. Portugal's government last month introduced new measures trying to reduce fraud and tax evasion and even the Spanish government admits that tax evasion has been a way of life for its citizens.

A Liberal sock puppet commented at Delaney's article that economists at SFU and Calgary had written recent love letters about HST. I engaged one of those economists privately in dialog but after a meek effort to defend his position paper, he went silent but not before admitting that his generic consumption tax position might not apply in whole to the BC economy.

Someone who doesn't follow economic and taxation matters wondered recently that, if HST will result in lower prices and be good for consumers, why are all those businesses advertising for customers to beat the HST?  Interesting question.

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