Only Nixon Could Go to China

It’s time for BC to tax all services to help pay for the pandemic

Only Nixon Could Go to China

It still drives me bonkers that lawyers’ bills in BC are subject to 7% Provincial Sales Tax (on top of 5% GST), yet the accounts of most other service providers in BC are not; particularly accountants, consultants, and realtors.

We all know the old trope sold to the legal profession in the 90s by the NDP government of the day. The PST on legal services would be used to fund Legal Aid. But the billions of dollars in revenue generated by the PST on legal services for the past three decades has always gone into the sinkhole of general revenue. It’s never been specifically dedicated to fund Legal Aid. A recent Vancouver Sun article calculated that the BC government collected nearly three times more in PST on legal bills than it directly paid to fund legal aid. Decades of long battles by the Law Society, the CBABC and other organizations to eliminate the PST on legal services have been fruitless (and not for lack of trying). Unfortunately, I can’t see PST on legal services ever being repealed. That ship has sailed.

This isn’t going to make me particularly popular among realtors, accountants, or the magical thinkers in BC Liberals (who strangely campaigned on the elimination of the PST for a year), but the PST should be expanded to include most, if not all services. Or better yet, we should reinstate the HST under a different acronym (like, say “BCVAT”).

Gordon Campbell tried a decade ago. But in one of the biggest public policy blunders in Canadian political
history (by one of BC’s best Premiers), the HST was poorly sold, poorly planned, poorly implemented and the government of the day failed to anticipate a campaign of disinformation and fake news about the tax; much of it propagated by former Premier Bill Vander Zalm (who had a political axe to grind with the Campbell Liberals).

Because the government picked the wrong statute under which to hold the referendum, and a question that might have well said “watch us shoot ourselves in the foot,” the government played to lose. Campaigning was left to those in favour of the tax and those against it. And who is ever in favour of a tax, anyway? The HST was defeated by some 76,000 votes, which I recall, was the population of Nanaimo at the time. If you know a compound word that begins with “cluster” and ends with a word that rhymes with “truck,” that would describe our dance with the HST a decade ago.

I’ve always been a believer in taxing consumption rather than income or wealth. So now that there’s a majority government in Victoria, it’s time to rethink a sales tax on all services, in part, because it’s unfair for lawyers to charge 7% PST but not accountants or realtors. And it’s also timely because the government needs the money to deal with COVID-19, the opioid epidemic, and our cash strapped municipalities (taking the burden off property taxes).

If there’s been PST on legal services for 30 years, then why on earth shouldn’t PST be expanded to include the bills of accountants and commissions paid to realtors? The problem is, under PST, nobody gets the Input Tax Credits to offset PST. But they would under HST.

So bring it back. Had Campbell mandated a lower PST component for the BC HST so that it totalled 10% or less for a few years, removed the application of the HST from kids clothing, bicycles, and other politically correct goods and services, and entered a revenue sharing deal to help fund municipalities based on a percentage of the HST raised within their borders, Campbell might have avoided both his resignation and the referendum. Perhaps the new provincial government in Victoria can learn from those mistakes.

There’s an old Vulcan proverb that “Only Nixon could go to China.” Maybe the same is true for the BC NDP. If it’s anything like how well they’ve handled the pandemic (they get full marks from me), perhaps they’ll get the HST right this time.

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