Business, the Public and the HST: Them vs. Us

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For immediate release: 
May 12, 2010

Editorial by Paul R. Landry, President & CEO

Debate in BC over the HST has hit an emotional button for a public that already feels burdened by taxes and understandably questions the government’s timing in announcing a new tax policy – immediately following its election win – that it had previously opposed. An inadequate communications strategy also failed to mitigate the public’s perception that the HST will most likely tear a bigger hole in our wallets and not much else. 

Sadly, the resulting HST debate for the most part hasn’t been about the facts. Instead, it focuses on the notion that the HST will help “business” while penalizing “the public”. This sort of broad generalization is both divisive and inaccurate. Like any tax initiative, there will be winners and there will be losers. Some businesses will be worse off and some individuals and families will be better off. But, over time, most British Columbians will benefit from the economic lift of the HST in the form of capital investments, productivity improvements, increased domestic and international competitiveness, more jobs and higher wages.

The “business” versus “public” debate also fosters the notion that business is somehow disassociated from the public – that business isn’t “us” or doesn’t do “us” any good. If changes in tax policy are good for “them” (business), they must be bad for “us”. But what if “them” is “us”?

Small business in BC is defined as a business with fewer than 50 employees or a business operated by a self-employed person with no paid help.  Approximately 98% of over 390,000 businesses in BC are small businesses. Chances are, you or your neighbour or someone in your family either owns a small business or is employed by a small business. These businesses employ well over one million British Columbians, almost one half of all BC’s jobs, and are responsible for 34% of the provincial GDP.

So, how is this related to the HST? Well, many small businesses rely heavily on machinery and equipment for production, even more so than large and medium-size businesses. The introduction of the HST will reduce taxes on new investments by small businesses by over 50% in 2010. BC’s taxes on capital investment will be lower than those of all the other provinces except Nova Scotia, New Brunswick and Newfoundland, which already have the HST, as well as the US, UK, France, Italy and a host of countries BC competes with internationally. Competitiveness is extremely critical for a province like BC, which relies on exports, to support much of our economy and our way of life. If people outside of BC don’t buy our goods because they’re too expensive or companies don’t want to conduct business here because taxes are too high or the administration of taxes is too cumbersome, then British Columbians will become increasingly isolated and less money will flow into the Province. In other words, the HST investment benefit will be enjoyed by small businesses and their workforce (a.k.a. “us”).

My industry, trucking, is the poster child for small business. There are approximately 20,000 trucking companies in BC, most of which are very small, family-owned operations with one or two trucks.  Access to capital is always a challenge. By the time the HST is introduced in July 2010, many trucking companies will have deferred investments in new equipment for several years due to recessionary pressures. With the economy recovering, there is pent-up demand for new equipment and the HST will grease the wheels of renewal.  Also, the economic boost caused by the HST will create more demand for trucking services, thus creating jobs in this key sector.

In the short term, the HST will increase prices on some consumables but, as was the case in the Atlantic Provinces that adopted the HST, reduced costs of production induced by the HST should mitigate the effect of these increases. In the longer term, increased productivity and domestic and international competitiveness, accelerated job creation and higher wages should more than close any remaining gap. The HST will undeniably help both “them” and “us”.

Should you be angry with how the government introduced the HST? Are you concerned about what the HST will do to your own wallet in the short term? Even if the answers to both those questions are “yes”, try to separate those issues from an informed, reasoned, factual consideration about whether the HST will help British Columbians –all of “us” – in the long run.

BCTA is the recognised voice of the provincial motor carrier industry, representing over 900 truck and bus fleets and over 250 suppliers to the industry. Over 13,000 vehicles are operated by BCTA members in BC. BCTA operating members employ 26,000 people in BC and generate over $2 billion in revenue in the province annually.

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