NDP rejects report’s findings
Jonathan Fowlie
Sun
The introduction of a harmonized sales tax in British Columbia will lead to the creation of 113,000 jobs within the next decade, a government-commissioned report to be released today has found.
“The tax reforms about to be implemented in British Columbia will have a profound effect on capital investment, jobs, and incomes in the province, representing a giant leap toward its becoming one of the most competitive economies in the world,” read an advance copy of the report provided to The Vancouver Sun.
The report was done for the provincial government by Jack Mintz, chair in public policy at the University of Calgary, an independent fiscal and tax policy specialist and a former president of the C.D. Howe Institute.
It comes amid public backlash over the new tax — which will come into effect on July 1, and will combine the seven-per-cent PST with the five-percent GST — and just days after the government announced plans to link money collected from the HST with that spent on health care.
In the report, Mintz said the move to an HST will significantly lower barriers to investment and, by the end of the decade, will account for an extra $11.5 billion in capital investment by companies in B.C.
“With the creation of a much more competitive environment for capital investment, businesses will be more willing to invest in British Columbia, and with greater capital investment will come more jobs, which will attract more people to the province,” he wrote.
Mintz also said that a reduction in the cost of capital investment will mean an increase in incomes paid to workers.
In his 14-page report, Mintz spoke in detail about the effect the HST will have on costs to business, but addressed only in passing the effect of the tax on consumers.
“It has been suggested that British Columbia’s adoption of the HST will raise product prices for consumers, but this is far from clear,” he said.
“Although it takes time for the elimination of taxes on capital goods to result in a decline in the prices charged to consumers, past tax reductions by the provincial government are reducing the prices businesses charge today,” he added.
New Democratic Party finance critic Bruce Ralston said the report makes improper assumptions.
“He uses a faith-based approach that tax cuts always create jobs and the empirical evidence doesn’t support that at all,” said Ralston.
As evidence, Ralston pointed to the machinery and equipment tax, which the government cut in 2001, saying he believes there is no evidence that any significant new investments came as a result.
Ralston also questioned the independence of the report, saying the government knew it would get a positive result from Mintz, because he did a similar report for Ontario last year.
In that report, Mintz found the HST in Ontario would lead to the creation of almost 600,000 jobs over the next decade.
© Copyright (c) The Vancouver Sun
