Province to get $1.6 billion in transition funds

Vaughn Palmer
Sun

When the B.C. Liberals were asked during the recent election campaign if they had any plans to combine the provincial sales tax with its federal goods-and-services counterpart, they responded with an artful denial.

“A harmonized goods and services tax is not something that is contemplated in the B.C. Liberal election platform,” was the governing party’s identically worded reply to both the Greater Vancouver Homebuilders’ Association and the Restaurant and Food Services Association.

Note how they stopped well short of read-our-lips opposition to a harmonized GST.

The Liberals weren’t saying it was the furthest thing from their minds. Only that they hadn’t mentioned the possibility one way or another in their election platform.

The ruse worked until election day. But as soon as the campaign was over, provincial officials began talking harmonization with their federal counterparts, resulting in the deal announced Thursday.

B.C. will move to a 12-per-cent sales tax effective next July, combining the seven-per-cent provincial sales tax (PST) with the five-per-cent federal goods and services tax (GST). The HST, they’re calling it and some observers will wonder if the first letter stands for “higher” as opposed to “harmonized.”

Critics were quick to point out the downside of the move, with arguments the Liberals themselves had made until recently. The combination will better than double the tax bite on a lengthy list of currently PST-exempt goods and services, from restaurant meals to haircuts to (is nothing sacred?) newspapers.

Overall it means higher up-front prices for consumers, tourists, homeowners and pretty much everyone in B.C. If not from cradle (diapers would be subject to a seven-per-cent rebate) at least to grave (funeral services lose their current PST exemption.)

Asked to account for the sudden reversal of position — less than three months ago the Liberals insisted they had “no plans to formally engage the federal government in discussions about potential harmonization” — Finance Minister Colin Hansen offered multiple rationalizations.

The province of Ontario had already announced the changeover. The federal government was offering financial inducements for provinces to climb aboard the single-tax bandwagon. Ottawa insisted B.C. had to act now or there wouldn’t be time to incorporate all the necessary changes by next summer.

“B.C. cannot be left behind,” said Hansen. Other reputed benefits include reduced administrative costs for the two governments, less paperwork for business, and the better investment climate that ought to emerge from a more integrated national tax system, and so on.

But those advantages have long been pitched by advocates of sales tax harmonization, only to be dismissed outright by a succession of B.C. Liberal ministers. Former finance minister Carole Taylor: “Not on my watch.” Former revenue minister Rick Thorpe: “Not on our agenda.”

What’s changed (other than the retirement of Taylor and Thorpe) is the B.C. Liberal government’s own room to move on fiscal matters.

So long as the government was balancing its budgets, B.C. could afford to go its own way on tax policy.

Slumping revenues, combined with rising spending pressures, means that the province could no longer turn up its nose when the feds dangled a financial inducement for sought-after policy changes.

In recognition of the benefits to the Canadian economy of an emerging national sales tax regimen, Ottawa established a formula to provide transition money to provinces that agreed to harmonize. In B.C.’s case, it works out to $1.6 billion, which the province will be free to spend any way that it sees fit.

Just the thing for a government that was recently forced to admit it can’t possibly hit a promised $495-million deficit target amid demands for hundreds of millions of dollars worth of additional spending on health care and other programs.

“It will help with our fiscal challenges,” Premier Gordon Campbell admitted. “We don’t have to take it all at once,” added an obviously relieved Hansen.

Both insisted that the province won’t realize any additional revenues from its share of the combined tax. Any new revenues will be offset by credits, exemptions and other changes to ensure no net increase in overall provincial sales taxes.

Individuals won’t be hit as hard as they might think either, they argued. A share of current sales taxes is hidden in prices. The harmonized tax has the singular advantage of putting everything up front.

Still, Hansen concedes he is facing a “hard sell” in persuading British Columbians to accept a hefty jump in an already unpopular tax with no obvious payback to the consumer. “There will be a lot of people taking pot shots at this,” he forecast.

Perhaps that is why the minister and the premier held off saying precisely how they would make use of that $1.6 billion transition money. Maybe to maintain programs. Maybe to reduce the deficit.

Or they might take the lead from the Ontario government, which has been using the transition money to cushion the financial blow for consumers and provide direct cash rebates of up to $1,000 to provincial taxpayers.

© Copyright (c) The Vancouver Sun

Stuart Hunter
Province

B.C.’s business community has given a thumbs-up to the B.C. government’s plan to harmonize the provincial sales and GST effective July 1, 2010.

But some business groups say the devil could be in the details.

Premier Gordon Campbell and Finance Minister Colin Hansen said in Vancouver Thursday that the new blended 12-per-cent Harmonized Sales Tax will be the lowest in Canada, promoting productivity and economic growth and creating jobs.

“This is an essential step to make our businesses more competitive, encourage billions of dollars in new investment, lower costs on productivity and reduce administrative costs to B.C. taxpayers and businesses,” Campbell said in a news release.

“Most importantly, this will create jobs and generate long-term economic growth that will in turn generate more revenue to sustain and improve crucial public services.”

By fusing the seven-per-cent B.C. provincial sales tax with the five-per-cent federal Goods and Services Tax, B.C. will have a 12-per-cent HST, removing more than $2 billion in costs for businesses.

Hansen called the PST “outdated, inefficient and costly” and, in some cases, a hidden tax.

Ottawa will administer the tax, saving Victoria an estimated $30 million annually.

Business Council of B.C. economist Jock Finlayson said the timing was right for the HST, given Ontario‘s proposal to implement a single value-added tax at 13 per cent July 1, 2010.

“It is a move that is going to be strongly endorsed by many in the business community,” Finlayson said. “Compliance costs will be reduced, which will make life easier for most businesses. It’s also good for Canada because the Canadian economic union will function better.”

Helmut Pastrick, chief economist with Central 1 Credit Union, was cautiously optimistic, saying many details have yet to be resolved. “In general it is a positive move,” he said. “It reduces the tax burden on businesses, which in turn promotes investment and expansion.”

Asked if the HST will help B.C. out of the economic downturn faster, Pastrick said: “That is largely dependent on other forces. In the medium and long term — yes.”

Brian Bonney, director of provincial affairs with the Canadian Federation of Independent Business, was somewhat surprised by the announcement but welcomed it.

“Overall, small businesses in B.C. will be happy,” Bonney said. “The negative side is

. . . this announcement has come out of the blue. We just went through an election and there was no mention of this.”

Government should sit down with business to work out what the HST means for the restaurant industry, drugs and medicines, and border towns, Bonney said.

NDP finance critic Bruce Ralston said the HST will result in families and seniors paying more for items such as vet bills, hydro bills and hair cuts in trying financial times.

– – –

Savings by Sector

Harmonized Sales Tax will deliver B.C. businesses an estimated $2 billion in savings, Victoria says.

– Construction saves $880 million

– Manufacturing saves $140 million

– Transportation saves $210 million

– Forestry saves $140 million

– Mining, energy saves $80 million

– Business compliance costs will be cut by $150 million

– The HST will give consumers point-of-sale rebates on products such as gasoline and diesel, books, children’s clothes and car seats, diapers and feminine-hygiene products.

© Copyright (c) The Province

Mayor Robertson’s homeless shelters are an ill-considered failure that has left a neighbourhood in chaos

Lin Sheffield
Sun

One of a series of photos taken around the Howe Street HEAT shelters. — LIN SHEFFIELD

Homelessness is a significant problem in Metro Vancouver. Residents have a moral obligation to assist vulnerable and less-fortunate individuals in a manner of their choosing.

But to provide a long-term, sustainable solution to homelessness, there needs to be a comprehensive, well thought-out plan looking after all those involved.

Vancouver Mayor Gregor Robertson’s bold social experiment to open two no-barrier shelters in False Creek North is a prime example of how not to approach the homeless problem. Not only did the mayor fail to inform residents that the shelters were opening, but he situated the shelters within metres of a pre-school, daycare and seniors’ residence with little regard for the consequences.

In months, the shelters transformed the once peaceful neighbourhood into chaos. Instead of these “no-barrier” shelters bringing in homeless people with shopping carts and pets not allowed in conventional shelters, the facilities have become a magnet for drug dealers, prostitutes and petty criminals.

False Creek North residents routinely witness people using and dealing illegal drugs (crack-cocaine and heroin) and carrying weapons. Residents have been intimidated, threatened and assaulted. We’ve seen prostitution, public sex acts, malicious vandalism, theft, and our properties used as dumping grounds for used syringes, condoms and human excrement requiring that the shelter alley be hosed down nightly.

In 12 years of living in False Creek North, I have never seen such disturbing sights. Residents no longer feel safe in their own neighbourhood.

For four months, residents and business owners have contacted civic politicians and sent photos of illegal and immoral activities in the neighbourhood, imploring mayor and city council to address our concerns. Council has ignored residents’ concerns, dismissing them with offhand statements such as: “we haven’t seen anything out of the ordinary”. . . “all kids litter, we need to teach them”. . . “crime is down” . . . and “surprising to hear very few complaints until now.”

When the media carried photos of a tattooed thug carrying an axe, Councillor Kerry Jang responded “a lot of these guys are carvers, so they have their tools.” Residents were routinely dismissed as “irresponsible” for airing their concerns about safety and security in their own neighbourhood.

Mark Smith with RainCity Housing, which runs the shelters, has publicly stated that residents’ “concerns are legitimate, there are far too many people housed together and we cannot control the outside element”.

The city’s recent attempts to crack down on troublemakers outside the shelters had little substance or effect; problems continue. Within hours of Robertson’s press conference proclaiming his new steps taken to further “raise barriers,” a shelter client threatened to stab my neighbour with a syringe, and was subsequently arrested and charged. The suspect returned to the shelter the next day.

Sadly, False Creek North residents now face new fury from shelter supporters for wanting the remaining “magnet for mayhem” closed. As recently as Sunday, on his way to City Hall, a resident was followed, taunted and threatened. Police are looking for two suspects.

Even though these shelters are a city initiative, Housing Minister Rich Coleman was forced to step in on June 29 to withdraw funding and close one of the two problematic no-barrier shelters imposed upon this primarily residential community. Coleman also directed the City of Vancouver to engage in “immediate community consultation” on the remaining shelter.

After failing to attend a community-organized townhall forum on this issue June 11 and ignoring residents’ legitimate concerns for seven months, Robertson gave 10 area residents a few days notice to attend a closed-door meeting on July 19. No public forum is planned.

The city posted an online survey inviting people to give input on the shelters in False Creek North and the homeless problem in Vancouver. The city’s survey postcards feature an admitted generic stock photo of a gentle-looking homeless man and his dog; hardly representative of visitors attracted to the Howe St. shelter.

The fundamental flaw with this online survey is that anyone can fill it out by entering a Vancouver postal code. It can easily be manipulated by special interest groups that could stack the results. False Creek North residents fear it will be little more than a public relations ploy by the mayor to justify his ill-conceived decision to open these shelters.

During the last civic election, Vision Vancouver campaigned on a promise to “increase accountability, transparency . . . with new opportunities for engagement, and improved consultation on major issues.” When opening the two no-barrier shelters, city council bypassed normal requirements for permits and bylaws. Residents were not consulted on the shelters. And contrary to verbal and written reports from the city stating otherwise, the City Hall withheld notification of the existence of the HEAT shelters from all area residents.

Robertson insists on keeping the remaining shelter open “year-round.” Is it any wonder this community has lost all confidence in the mayor to manage or control a problem that he alone created?

Many homeless people in Vancouver have drug, alcohol and mental problems. Addressing homelessness requires a comprehensive solution that involves not just shelter but treatment as well.

At the same time, when opening shelters, the city has an obligation to ensure the safety and security of residents is protected.

Lin Sheffield is a resident of False Creek North and a member of Concerned Citizens of False Creek North.

© Copyright (c) The Vancouver Sun

Third station to become Global TV network affiliate as advertising revenue falls

Jamie Sturgeon
Sun

Canwest Global Communications Corp. said Wednesday it will close two of its over-the-air television stations, including CHEK-TV in Victoria, as it moves to cut costs to cope with falling advertising revenue in the recession.

A third station, CHBC-TV of Kelowna, will be rebranded as an affiliate of the main Global TV network.

Saying it had no other “viable options,” the Winnipeg-based media company said it will close CHEK — cable Channel 6 in Metro Vancouver — and CHCA-TV in Red Deer, Alta., by the end of August.

Peter Viner, president of Canwest Broadcasting, said the decision followed an exhaustive review of the five stations that comprise the company’s secondary network, begun in February. Last month, Canwest agreed to sell two stations in Montreal and Hamilton for an undisclosed sum to specialty TV operator Channel Zero Inc.

“I’m pleased to say … we have been able to find creative solutions for three of the five stations, which will sustain more than three-quarters of the jobs impacted by the review,” Viner said in a statement.

The recession has exacerbated a longer-run trend for conventional TV broadcasters that has seen advertising revenue flow away to specialty channels, cable and satellite operators as well as online sources.

In a landmark decision last month, Canadian regulators said digital TV operators such as Rogers Communications that carry the signals of broadcasters like Global and CTV must begin preparations on compensation proposals as part of Ottawa’s plan to protect locally produced over-the-air content made by smaller-market TV stations.

© Copyright (c) The Vancouver Sun