Garth Turner: I know it’s efficient. So is martial law.
Apr 26, 2010 Guest Posts
Sometimes we are emailed full articles from other Blogs or from Newspapers, it’s not often that we choose to include the full contents on our site. Garth Turner posted this article on his Blog and we decided to post it.
Garth Turner, a business journalist and author of investment advice books, Garth Turner was a straightforward and outspoken member of parliament. Openly critical of some Conservative Party decisions, it probably came as no surprise when he was suspended from the Conservative caucus in October 2006. He joined the Liberal caucus in February 2007. Garth Turner used his blog to reach out directly to his constituents and provided insight into how party politics works in Canada and some of the decisions faced by a backbencher member of parliament.
From Garth Turner’s blog, http://www.greaterfool.ca/:
A few months after the federal government brought in the GST to slay the deficit, the finance minister – a great, gray, humourless god named Michael Wilson – tapped me on the shoulder. I want you, he said, to canvass the country and see if this tax has increased prices.
Tags: advice books, business journalist, conservative caucus, conservative party, finance minister, garth turner, GST, harmonized sales tax, HST, incarnation, investment advice, liberal caucus, member of parliament, michael wilson, party politics, politics works, provincial politicians, recession, ruling party
Fighting a Good Fight, Against the Odds. by: Rafe Mair
Apr 12, 2010 Guest Posts
Fighting a Good Fight, Against the Odds
Vander Zalm and colleagues should be proud of taking the fight against the HST into the public sphere.
By: Rafe Mair, 12 April 2010, TheTyee.ca
View full article and comments: http://thetyee.ca/Opinion/2010/04/12/AgainstTheOdds/
I say three cheers for Bill Vander Zalm and his fight against the HST! He and his colleagues have a Herculean task before them in trying to get the HST removed, but they have my support. It’s said that Vander Zalm ought to retire from the public scene. People who say that sort of thing are mad at the message and want to shoot the messenger.
Bill and I served in Bill Bennett’s cabinet for five years, and know each other well. It was not Vander Zalm the minister that caused me any heartburn but Vander Zalm the premier.
Vander Zalm, class act
I was on air during Bill’s term as premier and I gave him a hell of a hard time. Those were in the days where the media believed that it was their job to hold governments accountable — those days, alas, are behind us. In any event, Bill had every reason to hold a grudge of considerable proportions, yet he came to a “roast” for me and was a speaker. Not only was there no bitterness, but he wrote and sang a very amusing version of “On Top Of Old Smoky”; it was the hit of the evening. Whatever you might think of Bill’s political career, he’s a class act. Instead of being pissed off at what Bill’s doing we should be happy that he’s back in the arena of public opinion and fighting a battle that needs to be fought. It’s also worth remembering that Bill fought, unsuccessfully, against the privatization of BC Rail.
This hideous tax — which hits the poor much harder than well-off people — is what makes it fascinating that Mr. Vander Zalm and Chris Delaney, who are leading this fight, are both from the “right.” That in itself should make us listen to them and think.
Tags: 12 april, bill bennett, bill vander zalm, bitterness, chris delaney, class act, good fight, grudge, hard time, heartburn, herculean task, HST, political career, privatization public opinion, proportions, public sphere, rafe mair, thetyee, three cheers
Campbell’s #HST Illusion by: David D. Schreck
Mar 10, 2010 Guest Posts
On July 1, 2009, France reduced its value added tax (VAT – the equivalent of our GST or HST) on restaurant meals from 18.5% to 5.5%. They did that because they accepted the evidence that the tax on restaurant meals kills jobs; they expect 40,000 jobs to be created as a result of cutting the tax. Why does Premier Campbell think that economics works differently in British Columbia? If you can answer that question you might also know why he would say one thing before an election and do the opposite after the election.
Finance Minister Colin Hansen was almost laughed out of the room when he told reporters that money from the HST would be earmarked for health care. On March 6th, Vancouver Sun columnist Vaughn Palmer wrote: “By the end of this week, even Hansen was admitting that the move to link the HST to health care was mainly an exercise in public relations.”
Not to be deterred by its failed public relations exercise, today the Campbell government released a propaganda sheet that it tried to spin as an economic study. The 13 page paper by Jack Mintz of the University of Calgary’s School of Public Policy claims that over ten years the HST “is expected to increase the province’s capital stock by more than $14.4 billion and add 141,000 new jobs.” The words “is expected to” are significant because Mintz’s claims are nothing but wishful thinking, not backed up by any testable hypotheses – no model, no estimation techniques, no standard errors of the estimates.
Mintz argued that: “When maximizing the value of their shareholders’ equity, businesses will invest in capital until the marginal return on it is equal to its cost.” As the recent financial mess around the world demonstrated, it is arguable whether large corporations maximize shareholders’ equity, but that is not the biggest hole in the Mintz paper. He maintained that by lowering the marginal effective tax rate (METR) on capital, more projects will be attractive for business investments. Despite a few footnotes about assumed capital-labour substitution and the risk of changing federal policy, there is nothing in his paper that spells out how he arrived at estimates of precisely $14.4 billion in investment over 10 years and 141,000 new jobs.
Mintz failed to put his unsubstantiated estimates in the context of BC’s traditional investment and job growth so readers could tell whether his numbers are significant and thereby judge whether they justify shifting $2 billion a year from businesses to consumers. Note that in the absence of inflation that would be a shift of $20 billion over 10 years to justify investment of $14.4 billion; if Mintz is right, consumers could do the investment themselves and be almost $6 billion ahead. Back to the context for comparison: at 2% annual employment growth, BC will add over 390,000 in the next ten years. Mintz is claiming that the HST will boost that by 36%. That strains credibility when we know that jobs will be lost in the hospitality sector because of the tax. As for investment, over the 10 year period ending in 2008, businesses invested $97 billion in machinery and equipment in BC and $82 billion in non-residential structures, so Mintz is claiming that if the next 10 years are the same, business investment would increase by 8%. For those who are here 10 years from now, it might be challenging to separate the effect of lowering the METR from the effects of changing interest rates and commodity prices.
Before committing to the HST, BC had the opportunity to study the consequences of eliminating the provincial sales tax on production machinery and equipment. Instead of commissioning Mintz to produce his paper, the Campbell government might have attempted to analyze its own tax experiment. The Campbell government eliminated the PST on “production machinery and equipment” in 2001. I submitted a freedom of information request asking how much tax revenue was foregone for each year since that exemption and for any documents that discuss estimates of changes in investment as a result of the exemption. On October 30, 2009 I received an answer saying: “Pleased be advised that the Ministry has no records responsive to your request. Budget 2001 estimated the cost of the exemption when first introduced but the cost has not been estimated since because it is not part of the Tax Expenditure Survey.” Before embarking on one of the largest tax shifts in BC history, one might think that the government would have analyzed whether its initial experiment in stimulating investment worked or not, instead they hired Mintz to write a propaganda sheet.
It is probably true that lower taxes on investment means more investment, just as it is true that higher prices on restaurant meals means fewer meals. The trick is in determining how much. There appears to be good evidence that restaurant meals purchased decline by 1% for every 1% increase in price. There appears to be little or no evidence on how business investment responds to changes in taxation, but most economists would acknowledge that interest rates and commodity prices are likely to be far more important than marginal tax changes.
There doesn’t appear to be any provincial public opinion polling in the works that will allow us to measure whether the Liberals enjoyed a post-Olympic bounce or whether the public is buying their political spins. It may be the fall before the spin is tested, after folks see what the HST does to the price of lunch and a cup of coffee.
Tags: business investments, capital stock, economic study, effective tax rate, election finance, estimation techniques, finance minister, financial mess, HST, jack mintz, large corporations, new jobs, restaurant meals, shareholders equity, sun columnist, testable hypotheses, university of calgary, vancouver sun, wishful thinking
Finance Minister Colin Hansen insists that it’s not about misleading the public
Mar 3, 2010 Guest Posts
Adam Stirling Comment – CFAX 1070 Radio Victoria, Mar 3, 2010
I respectfully disagree…
Minister Hansen announced a new government bid yesterday to try to link the wildly unpopular HST to BC’s health care system
Minister Hansen pledged that every dollar raised from the harmonized sales tax will go towards BC’s cash strapped health care system.
What the minister is reluctant to admit is that every penny that goes into health care from the HST will just be clawed back from some other revenue source. To be clear it will make absolutely no difference. For example if an extra million dollars goes into BC’s health budget by way of the HST, that million will be clawed back from other sources of revenue, such as income tax.
It’s easy to see why the government is doing this however: they are scared. They are scared that the 85 percent of British Columbians that polls tell us are against the tax will rise up and defeat it in the upcoming counter petition and possible referendum.
I asked Minister Hansen on my show yesterday if his government has contingency plans in place should this petition actually succeed and force a referendum which nullifies the HST.
Tags: 1070 radio, bc economy, bc government, British Columbia, british columbians, contingency plans, hansen, harmonized sales tax, health budget, health care system, HST, human shields, income tax, million dollars, petition, public policy, referendum, revenue source, stirling, straight answer
Common Ground Magazine Cover
Feb 6, 2010 Guest Posts
As we get closer to our 3 month long Signature Collection Campaign, I thought I would share this Great magazine cover by Common Ground Magazine (with permission of course). I love the caption: OVERTAXAR from the director of “TITANIC DEBT”
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Tags: bc liberals, collection campaign, common ground magazine, Fight HST, FightHST, gordon campbell, HeiST, Liberals, overtaxar, signature collection, titanic debt
HST INPUT TAX CREDIT SUSPENSIONS likely for small business
Nov 11, 2009 Guest Posts
The BC Liberal government has made a big deal about how this HST is going to be good for business and how BC businesses will be able to recover “INPUT TAX CREDITS” paid out on a number of different items.
What Minister Colin Hansen and Premier Gordon Campbell did not tell you was that if Hansen figures things are sticky enough, he can suspend part or ALL of those “INPUT TAX CREDITS”. And not just for a short time either. 5 YEARS of full suspension, plus 3 years more to phase them back in.
Wait just a minute guys? What the heck did you need that for? If Hansen was not contemplating using this provision, why is it there?
It is very clear that the Liberals know full well what is coming after the 2010 OWE-lympics are done. And they have decided that your slurpee is too much of a luxury for them to miss the tax on.
Every small BC business is going to take a beating on the HST. Either directly, or indirectly because even if you can believe that insane $1.9 BILLION projection of increased tax burden on BC consumers, that works out to some $460 increased tax by every man, woman and child in BC. And those numbers are the ones offered up by the same fiscal sharpies that ran the last election of an approximate $460 million deficit projection only to have it revealed later it was in the multiple BILLIONS!!
No small business can be expected to see $2500 per family removed in terms of buying power. Because while families will be paying more for goods because of this HST, incomes are NOT going up to keep pace. So small BC businesses are in grave danger of being wiped out over this.
Mike Summers
Northern organizer, Fight HST
Tags: bc business, bc businesses, bc consumers, full suspension, grave danger, hansen, HST, incomes, input tax, last election, liberal government, man, mike summers, Owe-lympics, premier gordon campbell, sharpies, slurpee, Tax Burden, woman and child
