HST, difficult sell for politicians, with career killing downside
It’s been called a pig, a ghost, a monumental government screw up and a career killer.
And that’s just what members of the B.C. Liberal government are saying about the harmonized sales tax, which they quietly introduced in July 2009 less than three months after a third consecutive election victory.
Others haven’t been nearly as kind.
The HST has been billed by economists as good for business because spurs investment and creates job and is also a more progressive, fair consumption tax.
But it’s also a career killer for politicians from B.C.’s Gordon Campbell to Saskatchewan’s Grant Devine. Ontario’s Dalton McGuinty may yet feel its bite and the federal government has so far managed to escape its fangs, though it’s an open question for how long.
B.C. Premier Gordon Campbell practically admitted that the HST made mincemeat of his long-range, personal retirement plans when he announced in November he was stepping down mid-term.
After much soul searching, he said he realized he had become the hated face of the HST in British Columbia and it was time to pack up his red Olympics mittens and let someone new lead the debate, and the province.
The HST, its pros, cons and future, has already become the most dominant issue in the leadership contest to succeed Campbell in February, and promises to be a major factor in the May 2013 provincial election.
Ontario Premier Dalton McGuinty, whose Liberals also introduced the HST, is expected to face some HST heat in the fall provincial election, but not to the same fiery extent as in British Columbia.
Liberal leadership candidate Mike de Jong says British Columbians have already already made up their minds to dump the tax in the scheduled September 2011 HST referendum and the more the government tries to convince them otherwise, the angrier people become.
“We paraded this thoroughbred around the fairgrounds and people concluded we had a pig and putting lipstick on the pig now I don’t think is going to change people’s minds,” said the five-term Liberal MLA and former attorney general.
“I’m not optimistic the HST will survive a genuine vote amongst the public. We should plan for what I think the result will be. We botched this one.”
Billed as good for business, the HST included a hidden political price the B.C. Liberals didn’t anticipate. Ontario’s Liberals have fared better, said McMaster University political science Prof. Henry Jacek.
“When taxes are changed, people get upset, particularly at the retail level in North America,” he said. “It really is challenging for a government to make the argument as to why this (new tax) is a good thing.”
But Jacek said McGuinty, who goes to the polls in October, faces an almost bigger measuring stick than the HST because the majority of Ontario voters are deeply focused on the strength of the economy as opposed to the smaller percentage of voters who are fixated on the HST.
“What’s really bothering them is economic insecurity, their pensions, their hospitals,” he said. “The tax thing, it gets a lot of air time, it gets a lot of space, but I don’t really think that’s what’s agitating the public.”
Former Saskatchewan New Democrat premier Roy Romanow said he used the HST back in the early 1990s as one of his many available sticks to beat the floundering Conservatives and Premier Grant Devine from office.
The Saskatchewan Conservatives reached an agreement with the Brian Mulroney Tories to combine the federal Goods and Services Tax with the provincial sales tax, but the deal was never formally implemented because the New Democrats, who were elected to power, killed the proposed tax.
Romanow said Saskatchewan was facing a financial crisis and voters were not in the mood to adopt any new taxes.
“The party I led was for the position of not harmonizing it,” he said. “We just had too many issues on our plate, we argued. When a government is ripe for defeat, there’s an old saying that says any stick to beat it will do.”
Saskatchewan never went back to the HST and doesn’t appear willing to take a second look. Some would say Campbell and his B.C. Liberals should have done the same.
An exasperated Finance Minister Colin Hansen has said he spent more time attempting to debunk the belief that the government had planned to introduce the HST even before the election, contrary to their claims, than actually talking about how the harmonized tax works.
Liberal leadership candidate Kevin Falcon, who many describe as a Campbell protege, said the government screwed up the introduction of the HST. His campaign includes a promise to shave two percentage points off the HST, making it a 10 per cent tax as opposed to 12 per cent.
University of B.C. political science Prof. Richard Johnston said the B.C. Liberals mistakenly believed they could ram the HST down the throats of British Columbians.
“They overplayed a hand,” said Johnston. “Either it never occurred to them to engage in a consultation or they thought they could tough it out. This testifies to the power of new taxes as a political liability.”
He said the B.C. government’s mishandling of the HST has sent Campbell to “a special place in hell for people who screw up good ideas.”
Romanow said the HST has the potential to arouse populist sentiments, which are openly evident in B.C. with the return of former premier Bill Vander Zalm.
He said he felt the pinch of the HST recently when he looked at his Toronto hotel bill and saw a $14.75 HST charge.
“You automatically say our economy is struggling, or I can’t afford it, I’m against it,” said Romanow. “It’s very easy to arouse people on that kind of an argument, but I think it’s a much more complicated argument than that.”
In B.C., Vander Zalm, a former Social Credit premier who left office in 1991 after a conflict of interest investigation concluded he mixed politics with personal business, has been leading the anti-HST charge.
Once one of the most reviled leaders in B.C. political history, he managed to sign up more than 500,000 people for an anti-HST repeal petition, which prompted the majority-vote referendum.
Vander Zalm’s forces are currently using British Columbia’s unique direct democracy laws to try to recall Liberal MLAs from office and force byelections in an attempt to unseat the government over the HST.
Leaked notes from Opposition New Democrat executive meetings reveal party president Moe Sihota, a former cabinet minister from the Glen Clark NDP era of the 1990s, outlining the official party line on the HST and then the nudge-nudge, wink-wink unofficial line.
The notes said New Democrats are officially opposed to joining Vander Zalm’s recall army, even though many worked on the earlier petition campaign. But Sihota is also quoted saying the NDP must quietly, but effectively embrace the coming recall campaigns.
In Ontario, McGuinty’s relative success with the HST, compared to B.C.’s failure involves an unholy alliance between Prime Minister Stephen Harper and the Ontario premier, said Jacek.
Harper’s Conservatives managed to emerge unscathed from the HST debates in British Columbia and Ontario, even though Ottawa has been pitching the value-added tax to the provinces for years.
Jacek said Harper’s Conservatives offered Ontario $4.3 billion to adopt the HST, but it unofficially sweetened the pot with millions in federal economic infrastructure project dollars.
It soon became a familiar sight in Ontario to find infrastructure projects being announced in Ontario ridings held by federal Tories and provincial Liberals, he said.
“Part of this deal over the HST was not only the big amount of cash … but (Harper) also said we’ll start the infrastructure money flowing,” said Jacek.
Federal politicians kept their heads down and mouths shut in British Columbia to avoid being caught up in the HST uproar even though it was an Ottawa-driven deal.
“I have people here who would come in and say, ‘My God you’re doing this wrong,”’ said former B.C. Liberal Blair Lekstrom who quit the party caucus over the HST.
“I said, ‘You do know that the federal government wants the HST,’” said Lekstrom. “They said, ‘What.’ I said, this is our idea so I’m not passing the buck by any means, but when you talk to your MP and if they tell you any different, they are dead wrong.”
But politicians of all persuasions won’t be able to hide from the HST in the New Year.
Recall campaigns will continue well into 2011. The HST will be a focal point of the Feb. 26 Liberal leadership race to replace Campbell and the HST will likely dominate the contest to replace NDP Leader Carole James, who quit this month after failing to control 13 caucus dissidents who did not support her
If British Columbians vote to repeal the tax, the government must repay $1.6 million to Ottawa and likely spend millions of B.C. taxpayer dollars to return to the former provincial sales tax system.
Lekstrom said the HST exhibited deadly political consequences in British Columbia, and there may be more to come.
“It doesn’t matter how good an idea a government thinks it has, if the public doesn’t think it’s a good idea, you’re fighting an uphill battle,” said Lekstrom.
“That’s what happened here.”
