British Columbians Vote Down the HST

August 26, 2011: Through a province-wide referendum, British Columbians voted to extinguish the much-hated Harmonized Sales Tax.

For months prior, discussion focused on British Columbians rejecting the 12% sales tax primarily as an emotional rejection of the government's manner of introducing it. It was not directly addressed in the governing party's election camapign. After introducing it, the government began defending it at every opportunity, spending millions of taxpayer dollars mostly with what was interpreted as a "We know tax policy so you just accept it as good" message.

The combination of 7% provincial and 5% federal sales taxes still applies to a greater variety of transactions than before the HST was introduced over a year earlier. The BC government is expected to begin a many-month-long phase-out the HST by this year's end.

The BC premier who brought in and defended the HST (Gordon Campbell) stepped down from office months before the 8/26/11 referendum results could be announced. The premier taking his place (Christy Clark) saw three members of the BC legistative assembly bow out also, though in weeks much closer to the referendum that would quash the sales tax in favour of the prior sales tax regime that covered fewer transactions with separate privincial and federal sales taxes.

Most of the public discussion about the HST and the referendum included sentiments summed up thus: "The government has to raise revenue somehow to pay for all of the programs that people in the province benefit from. Taxes are the most accepted way for governments to raise revenue. They tax people's incomes and they tax sales. This just happened to be an unpopular example of a government doing what governments have to do to fund provincial programs."

The photo accompanying this blog post depicts Henry George in his younger years, around the time when he had an historical paradigmatic insight about how governments ought to raise revenue in accord with intuitive principles of fairness, equity, and preserving incentives for people to produce wealth.

My central problem with the HST was not how or when it was introduced. My vote in favour of extinguishing it was not, as many have suggested, one more way of kicking former premier Gordon Campbell. Rather, the HST and nearly all of the discussion about it reflect a faulty paradigm.

As my letter to the BC government in the preceeding blog post discusses, there is a whole other paradigm for viewing public revenue and taxation. It has won the backing of an impressive list credible champions for centuries. Yet, it has also been pushed aside (see The Corruption of Economics).

BC need not think simply of how to replace the revenue of the HST. That evokes the same faulty paradigm again. Rather, BC ought to reconsider the whole paradigm of taxation and public revenue that made a 12% sales tax (among others) appear to be good tax policy. Indeed, we would all be wise to reconsider the georgist paradigm. Then, all could benefit as taxes could harmonize with justice.

- Glenn R Harrington

Recommended reading: "Progress & Poverty: An Enquiry into the Cause of Industrial Depressions and of Increase of Want with Increase of Want - The Remedy" by Henry George

- GRH