MEDIA RELEASE

For immediate release

May 4, 2011

Delay in answering the HST question continues to have negative effects
on local business: Macdonald

VICTORIA – In the Legislature on Tuesday, Columbia River – Revelstoke MLA Norm Macdonald spoke out against the continued delay in allowing citizens to have their say on the Harmonized Sales Tax (HST).

Initially it was promised that the referendum on the HST would be held on June 24th, 2011, but now a final decision will not be made until August.

“Businesses affected by the HST need certainty, and Premier Clark’s delay on getting this question answered is hurting local businesses,” says Macdonald.

Macdonald quoted the concerns of a Kimberley realtor who indicated that resort communities in eastern British Columbia have been particularly impacted because condominium sales in British Columbia must now include 12% HST.  Resort communities are competing with real estate markets in Alberta and the United States where tax rates are much lower.

Potential recreational real estate buyers are taking a pass on buying in British Columbia because of the uncertainty about the tax.  Real estate developers and realtors are left with product that they can’t sell unless they are willing to pay the HST for the buyer, a $36,000 cost on a $300,000 unit.

“British Columbians been told that the HST will result in more jobs and more economic activity but this situation totally refutes that claim,” continues Macdonald.

“First, the BC Liberals implemented this tax in a thoughtless and duplicitous way, and now they are dithering and delaying on how the decision on the tax will be made.  It continues to show just how little the BC Liberals care about how their policies affect us here in Columbia River – Revelstoke.”

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MEDIA CONTACT: Joy Orr (o) 250 344 4830 (c) 250 344 1359 (e) joy.orr@leg.bc.ca

BACKGROUNDER:

Hansard (Draft transcript), Tuesday, May 3rd, 2011, afternoon:

N. Macdonald: I'll keep my remarks fairly tight. Many of the things that we're going to talk about have been approached already by fellow members of the opposition.

I do want to put on record, as I did when we were back here a year ago talking about the HST as a piece of legislation…. I did put on the record things that people in my constituency had sent to me, talking about the impact of the harmonized sales tax. I want to do that just with one more person, talking about the impact not only of the legislation but of the uncertainty that is being created.

We're here looking at Bill 4, and it basically replaces the September 24 referendum that's required under the Recall and Initiative Act. The mail-in referendum will be set under — as the minister pointed out — the Referendum Act, and the rules for that will be set without the scrutiny of the Legislature. It's going to be done by regulation.

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Now, I think what everyone understands in British Columbia is that this is a government that has a willingness,

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pointed out, the Referendum Act. The rules for that will be set without the scrutiny of the Legislature. It's going to be done by regulation.

Now, I think what everyone understands in British Columbia is that this is a government that has a willingness, almost a readiness, to manipulate processes. They do that regularly, even with things that should be as sacred as how we work in the House. So it's a government that's willing to do that.

I'll just touch on one very clear manipulation that's begun, and that's around financing. There is a recognition in what the Premier has said and what this government has said that money plays a factor in creating a fair process.

They've provided money. They've provided a tiny sum for one side in favour of the referendum and a tiny sum for the other side. So there's recognition that money plays a factor. But then they set up the process by very deliberately not putting in place any restrictions at all on third-party funding, with commercials or advertising or any limitations at all. What we know is that that is going to create a massive imbalance.

There's a willingness to try, on behalf of this government, to get their way on this. That's the pattern we have seen from the beginning — a willingness to bend what is acceptable practice in order to get the result that they want.

That began when the HST was first introduced, following a very clear commitment, a written commitment during the election in 2009, to not introduce the HST. It began then, and it has continued over the past year and a half, two years. It continues with this legislation. It's clear that there is going to be a lack of fairness, because there will not be rules in place to limit spending.

There was also a clear promise by the Premier — and it's been alluded to by previous speakers — to move up the date of the referendum. I want to speak to the uncertainty about a process that now stretches into August, instead of a conclusive result delivered June 24.

I'll just take one example from one business. Remember, the cost of the HST impacted restaurant meals, telephone, hockey tickets, haircuts, movies — a whole host of new areas that were not previously covered by the PST, including bicycles, as I'm reminded; a long, long list. I just want to talk to one of them. It is around condominium sales.

This is an e-mail that was sent to me by a realtor from the East Kootenay, Marilyn Jolie. She's referring to the sale of condominiums up at the resort in Kimberley. I'll just quote from the letter that was sent. Marilyn says that "there is difficulty in selling condos on the ski hill because of the implementation of the harmonized sales tax."

Then she goes on to explain: "Should someone want to buy a condominium in B.C., the HST must be paid each time, as they are viewed as a commercial enterprise. So say I have a buyer coming in this weekend, and they would like to purchase a condominium for themselves and family." So there's no rental pool here. "They will have to pay 12 percent on the purchase price. So if the condominium is valued at $300,000, then $36,000 is due and payable on completion, as well as the property transfer tax."

Now, we come from a border region. We compete for tourism and for purchases like this with Alberta and the United States. Most of the people, about 70 percent, that come in to Kimberley resort come from jurisdictions that lie to the east of British Columbia.

"So the buyer that purchased that same condominium would have no HST and would pay 7 percent less, and the property transfer tax would not be there. Or they can go to the States and purchase without any additional taxes at all. And believe me, they do," says Marilyn Jolie.

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She goes on to say that this is making life difficult for all resort communities. This is discretionary spending for the most part. She says clearly that the uncertainty of when the HST will be repealed is also an issue. "Why buy now? Let's wait and see where the HST will go."

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communities. This is discretionary spending, for the most part. She says clearly that the uncertainty of when the HST will be repealed is also an issue. "Why buy now? Let's wait and see where the HST will go." So I just refer to that in that the HST was introduced July 1, so the summer season for selling was lost last year, and because we are not going to a definitive answer on June 24 with this process, we again lose the summer season for realtors in Kimberley and other resort communities.

"The tax being implemented across the board was thoughtless and unfair. They say business will hire more people when they make more money, and that is true to a certain extent, but look at the billions the corporations have in cash now, and they're sitting on it. They're not hiring as they should be. The fairy tale about passing savings on to the consumer, of course, has not happened." So that's Marilyn Jolie. It's just one example of what MLAs are hearing in their offices and have heard for the past year and a half, two years.

This tax is a problem. The longer the uncertainty remains is a problem. This side feels so confidently from what we've heard in our areas that the tax will be rejected that we're choosing to overlook deficiencies in the system that the government is putting forward. But there is no question that from day one, this initiative has been a debacle. It has been a disaster. It has cost Premier Campbell his job. There's no question it has cost the credibility of some very fine members on the government side. It continues to be a problem.

Now, I want to keep my remarks very quick. We have in the past been given an opportunity to go through and list example after example of where the harmonized sales tax has hurt the people that we represent. I know in my area 30 percent of the people took the time to find the opportunity to sign the initiative petition, which I think we need to remember is where this began.

This began as the people of British Columbia standing up to a tax that was seen as introduced in a duplicitous way and one that was clearly unfair and that had shifted the taxes from corporations, in many cases multinationals, onto the backs of individuals and families, to the extent of almost $2 billion per year.

So that debate has been had. The next debate will very clearly be as unfair as the government can make it, but in the end, I feel confident that certainly the people that I represent will take the opportunity to reject the harmonized sales tax and will look to the government to follow through on its commitment to rid us of the HST.