West Vancouver-Sea to Sky MLA Joan McIntyre said the Liberal promise to reduce the harmonized sales tax (HST) to 10 per cent by 2014 became "more than a promise" on Tuesday (May 31).
"A binding motion passed in the B.C. legislature today is a firm commitment to all British Columbians that this government will keep its promise to reduce the HST to 10 per cent," announced finance minister Kevin Falcon from Victoria on Tuesday.
As a result of the motion being passed, Falcon must immediately advise the federal minister of finance to reduce B.C's portion of the HST to six per cent on July 1, 2012 and a further reduction to five per cent on July 1, 2014, if the upcoming province-wide referendum determines that the public does not support the tax.
Under the terms of the binding motion, the Province will also provide one-time transition cheques for $175 per child that will be issued to families with children under 18 years old. In addition, low and modest income seniors will receive a one-time transition cheque for $175.
"This binding motion makes it crystal clear to all British Columbians that this government will keep its promises on the changes to the HST," Falcon said.
Proposed changes to the HST surfaced shortly after a four-member, government-appointed panel issued a report last month that undermined many of the government's selling points for the tax and McIntyre admits that "at first blush, it was disappointing."
The tax has so far not been revenue-neutral, as the government had claimed, and the job-growth benefits are now predicted to be far more modest than the government had predicted.
Still sold on the value of the tax itself, but determined to win over the public, the Liberals' proposed changes were announced shortly after the report was released.
However, all the HST changes are contingent on the June 24 referendum - if British Columbians decide to return to provincial sales tax (PST) plus government sales tax (GST), the Liberals' proposed changes will be void.
McIntyre said the motion is a symbol of the Liberal party's dedication to adjusting the HST "in a way that should protect all taxpayers from this switch to harmonization."
"I absolutely believe that the motion is our commitment to make sure that the public knows that we are very serious about this," she said.
McIntyre recognizes the anger evoked from the public by the HST's implementation, but she said she hopes it will not cloud voters' judgment when B.C. residents decide whether to vote for or against the HST.
"We have taken this whole exercise very seriously. We really offended the public. We've apologized and we have now taken great pain to rebalance the tax burden," said McIntyre.
"We hope that the public will forgive us and not penalize us for the way it was handled but actually look at the merits of the tax," she said.
According to Falcon, the cost of issuing the transition cheques would be $200 million, whereas the cost of reverting back to the PST/GST system would be approximately $3 billion.
McIntyre said with the HST changes, she hopes the B.C. public will make a decision based on information, not on anger.
"These aren't my words, but someone who explained it today said that by saying no to HST at this point, the public would be cutting off their noses to spite their faces to hurt us," she said.
"I understand the anger, so I am not dismissing that some people are still very angry, but I think people by and large have understood that we got the message loud and clear.
"The public can be mad and they can vote us out in the election, but for the good of the economy and business and jobs and families - this is the right tax policy."
She wants the public to understand that businesses will be much further ahead and consumers won't be penalized once the changes are made.
"I think one of the biggest criticisms we heard was that it was a big swing from business burden to the consumer and this almost makes the pendulum swing the other way," she said.
"By the time we get down to the 10 per cent tax everybody, even the highest income levels, will be protected and in fact better off under the combined harmonized tax than they would have been on the GST/PST system. It will make a material difference to everybody."
McIntyre said people "need to keep in mind that over 80 per cent of the goods and services that we buy on a daily basis already had the 12 points on them and all of that going forward will have 10 points."
"We're seriously ensuring that everybody comes out better ahead," she said.
When HST was implemented, several items that weren't charged PST/GST remained unchanged and are not being charged HST, such as rent, mortgage payments, basic groceries, child care expenses, prescription drugs, public transit and existing housing.
Almost all household goods such as cars, furniture, electronics, appliances, clothing, footwear and beauty products also remained unchanged because they were already charged PST/GST.
Routine spending that used to be taxed only five per cent GST and is now taxed 12 per cent HST includes restaurant meals and snack food, hairdressing and manicures, bicycles, tobacco products, professional services, and most recreation items such as movies, gym memberships and magazines.
In response to critics claiming Premier Christy Clark was attempting to buy referendum votes with voters' own money, McIntyre reminded the public that all of government used "voters' own money."
"I appreciate that's the criticism and the easy thing to say, but I'm hoping the public will sort of understand that all money is the taxpayers' money," she said. "It's not government's money, it's not our money that we're spending, the money that we have is all from the taxpayer."
"The taxpayer is government, the average person is government, we're not separate from that. We're trying to mange their money and respect their money in prudent terms."
To offset the cost of lowering the HST by two per cent, the Liberals also plan to raise corporate tax by two per cent - from 10 to 12 - and defer lowering small business tax from 2.5 per cent to zero.
McIntyre said most businesses seem willing to sacrifice in that manner to keep the HST.
"Really it comes down to, 'Do you want 10 per cent on virtually all services and programs versus 12 per cent on 80 per cent of what you buy?'" asked McIntyre.
"We're hoping that we've now come up with a formula that every individual, every family, every tax bracket, when we get down to the 10 point tax will be further ahead than we were under the older system."
Ballots will be mailed out by Elections B.C. on June 13 and must be returned by July 22. For more information on HST and to view the independent panel report, visit www.hstinbc.ca.
