A report was released recently on funding transportation projects in Metro Vancouver. Once again, there was no clear recommendation, just a few ideas that have been around for a while. No one, but no one, wants to take responsibility for introducing what will no doubt be an unpopular new tax, especially when it would cost $5 to $8 a day for the average driver.
I think the biggest mistake was not approving the 0.5 per cent increase in PST. Regardless of where you live, regardless of your vehicle ownership, you benefit from our roads, and everyone should pay for it. Further, it is a progressive tax, because it’s based on consumption – the more you make, the more you spend, the more you pay.
That got me thinking. Both that and the HST referendum resulted in bad decisions from a policy perspective. What if we use these as the basis for our transportation problem?
Here’s my thought. Bring back the HST, but call it the CST (combined sales tax). Lower it to 11.5 per cent province-wide, but in Metro Vancouver keep it at 12 per cent and put the extra 0.5 per cent (about $320 million) towards transportation infrastructure, more than the mayors had requested in their 10-year plan. Transportation funded, and no new taxes.
The HST was good policy, just not well understood, and too rapidly implemented. People thought it was a new tax, instead of a combined GST and PST. So change the name, keep it simple and call it the combined sales tax (CST). Since it’s a flow through tax, Metro Vancouver businesses remit 12 per cent, while the rest of the province charges and remits 11.5 per cent.
The biggest complaint with the HST was the addition of seven per cent on children’s clothes and restaurant meals. It didn’t devastate restaurants as predicted, but we can find a way around the children’s clothes part. That can fixed with a rebate based on income, and don’t forget, there used to be a great quarterly cheque sent out based on the previous year’s tax return under the HST.
The B.C. budget reports that PST revenues for 2018/19 are roughly $7.5 billion, so a half-point reduction equates to $536 million per year overall. That seems like a lot of money for government to forgo, unless, of course, we can get the federal government to give is back the $1.6 billion it offered for us to move to a combined tax initially.
That would cover the gap for a while. Plus, there will be efficiencies along the way. The big incentive for keeping the HST initially was it would drop from 12 per cent to 10 per cent, so I’m guessing this would actually increase government revenues over time. Just depends on the state of our relationship with the feds these days.
Implementation is the big part. Don’t do it overnight. Talk about it, for a year. Explain it clearly so there’s no confusion like last time. But since the topic has shifted to a huge increase for drivers (projected to be $1.15 billion), I think there will be a lot more acceptance for anything other than massive road pricing.
So let’s see: no road tax, transportation funding achieved, increased revenues for government and more affordable for consumers. Sounds like a win-win-win-win.
Nahh, it’ll never work. No one wants to get blamed for introducing a new tax, even though it isn’t new.
Brad Sherwin, MBA is a long-time resident of South Delta, and has almost 30 years’ experience in marketing, public relations and business strategy. He teaches marketing at Douglas College, coaches hockey goalies and is president of the board of directors at Deltassist.
