Stephen Rees's blog

Thoughts about the relationships between transport and the urban area it serves

Column: Try this on for size: Sales tax on bikes returns, fossil fuels exempt

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Vaughan Palmer in the Sun kicks the ball into the open goal.  I am not sure if the the tax on bikes is actually the most important feature but it does once again give the lie to the Liberal’s pretence to care about greenhouse gas emissions or urban traffic.

“…some …thought the … carbon tax had merit as a tool for putting a price on emissions of carbon dioxide and other greenhouse gases”

Very few, I suspect. The price on emissions was far too low to have any effect on behaviour. Moreover, the actual effect was more than offset by the decline in gas prices brought about by general falling in demand due to the recession. The carbon tax – already offset by those $100 cheques – really did not hurt at all. And to have any effect it had to be noticeable. It wasn’t.

The Harmonised Sales Tax is being touted as “good for business” since it reduces their administrative overheads a bit, though frankly I doubt that we will see a big increase in the number of accountants in the dole queues. The real winner is the provincial government itself, which sees a huge one time payment from the feds – over $1bn that can usefully have some impact on the provincial deficit when other revenues are down – and a steady stream of new revenue. Because lots of things that are now tax free will not be (not just bikes) and we will be paying more. The “revenue neutral” claim has very little credibility. And we are already hearing from the restaurant businesses – and the realtors and developers who have had such a close relationship with the Liberals – and who seem to have been taken by surprise.

The most obvious weakness of the Liberals case is that this move was not part of their election platform and they were denying right up to election day. But within a few days after the election talks started with the Feds. Just like BC Rail. This is not just breaking electoral promises it is clearly deliberate deception about their intentions. And with fixed election dates, of course they do that now and hope that after the four years of this term it will be forgotten.

For a party that ran on the “safe pair of hands” and “don’t vote for them they will raise your taxes” slogans, I think this one will stick firmly. Of course the NDP will have a field day – but a lot of Liberal supporters will be feeling annoyed, and with very good reason. But the people who will find this most difficult are those on low incomes. Our tax system has become steadily more regressive as tax is shifted away from income tax to consumption taxes. Changes in sales tax will have very little impact on those who have large incomes and already spend a great deal on “conspicuous consumption”. But for those people on low and fixed incomes – and there has been very little increase in the incomes of those at the bottom end of the scale in recent years – even small changes in sales taxes have a disproportionate impact on what they can buy. They already pay the government proportionately more of their small incomes – leaving less for essentials such as food and shelter and are  far more price sensitive than the wealthy for whom high prices are simply an useful guide to quality. It is a curious notion in the neoconservative philosophy is that the poor need less and the wealthy need more – but that is exactly what we have seen in recent years, and this is just another plank of the same structure.

By the way “fossil fuels exempt” is probably not a very wise line to take either. The province gets plenty of tax revenue from fuel. What should be noted is that GST is a tax on tax – and, as far as I know, Canada is one of the very few countries that levies national taxes on provincial taxes. I had never heard of this practice until I came here and I am still astonished that we put up with it. That alone would have justified refusing to join HST until that obvious unjustifiable impost had been removed.

Written by Stephen Rees

July 25, 2009 at 11:02 am

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