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Forest Firms Love the HST? Why?
Timber companies keep getting bigger tax breaks, yet put less and less into BC. The HST won't turn that around.
BC's bounty: Photo courtesy of Whiteheadjesse from Your BC: The Tyee's photo pool.
-
In Defence of the HST
This is good tax policy for consumers, say two UBC economists, and I agree.
-
The HST's Strange Friends
Why aren't Canadian Taxpayers Federation and chambers of commerce fighting the tax small business hates?
-
Why Campbell's HST Is Bad for the Planet
Fossil fuels are exempted, making the carbon tax a joke. Here's a better idea.
"Approximately 40 per cent of PST revenue is paid by businesses on goods and services which they purchase to run their operations -- everything from equipment, machinery, vehicles, and building materials to office supplies, furniture, energy, legal services and more. As this PST-related tax burden is removed, the vast majority of businesses will be in a better position to invest, to grow, and to sustain and create jobs." -- Council of Forest Industries, 2009
"This is the single biggest thing we can do to improve B.C.'s economy. 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... this will create jobs and generate long-term economic growth..." -- Gordon Campbell, July 2009
It's hardly news that Gordon Campbell is overselling the virtues of his government's planned harmonized sales tax. He's been doing it for a year, ever since his sudden conversion to the merits of the HST -- just days after a provincial election in which his party repeatedly denied that the HST was even on its radar screen.
But it's a bit hard to understand why the usually careful Council of Forest Industries is making inflated claims about the HST.
Because in fact, COFI members and other forest companies are already largely exempt from B.C.'s current sales tax. They don't pay it on buildings. They and most industrial corporations don't pay it on "production machinery and equipment purchased for the use of qualifying persons," which include manufacturers, the petroleum and oil and gas industry, mining and logging.
So forest companies' claim about the "PST-related tax burden" is hardly such a big deal. And COFI's claim about "equipment, machinery, vehicles" is untrue. They don't pay PST now on those things or on buildings.
Other tax cuts, no investment boom
Now, if the premier and the industry are wrong about the PST's impact, perhaps they're equally wrong about the HST's alleged benefits. They claim the HST will save the forest sector $140 million a year. Even that would be pretty minor: a 1.6 per cent annual reduction in costs, the United Steelworkers union estimates, hardly enough to make or break B.C.'s forest companies let alone bring "billions of dollars in new investment."
After all, if lower taxes caused investment, Campbell's huge reduction in corporate income taxes would have already done the trick.
He cut them from 16.5 per cent in 2001 to 10.5 per cent today; he plans to further reduce them to 10 per cent by 2011. He eliminated capital taxes and cut property tax, especially for big companies. As part of the 2008 carbon-tax package, Campbell cut the corporate income tax rate 10.5 per cent and plans to cut it as low as 10 per cent. The HST will reduce it even more.
Add to that huge federal tax cuts and we should have seen a flood in investment and job creation. But no. In fact, investment in B.C. has increased on average just 0.26 per cent per year since 2001.
Forest industry investment has been negative over the same period.
And by 2008, before the economic crisis, the industry had already lost 23,700 jobs under Campbell's tax-slashing regime.
It's not tax savings those companies want; it's lower taxes and higher profits; more returns on less investment. And profits on their own don't cause investment or job creation. All told, there's no good reason to expect much benefit at all from a tax that lets companies off the hook but makes average families bite it even harder. ![[Tyee]](http://thetyee.cachefly.net/ui/img/ico_fishie.png){kind=small}
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- ...while on the streets, pirates and ninjas put aside mutual animosity to join student protests
35
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crankypants
2 years ago
No arguments here
The HST is really nothing more than class warfare. The elite in our society have felt threatened by the fact that the middle class was infringing on preferential status. The imposition of this tax will eventually put them back in their place.
Consider this. Tax rebates will probably help the poorest of the poor, as they will continue to struggle to survive. The elite will see this tax increase as nothing more than an inconvenience. That leaves the middle class to shoulder the brunt of the tax.
Colin Hansen and Gordon Campbell have accused the NOHST campaign of using mininformation to gain public support of the initiative. The reality is that the government is using misinformation to justify their actions.
It is all smoke and mirrors. The only reason we are even facing this idiotic situation is that Campbell and Co. misled the electorate about the economy during the last election and they could only see the $1.6 billion bribe from the feds to get them out of it.
Campbell and Co. have stated that the implementation of the HST is the one best thing they could do for the economy of BC. Maybe it is time that they came clean and admitted that they have been incompetent from the getgo and the one best thing they can do for BC is to resign enmasse.
Camero409
2 years ago
NO HST
The article is dead on and crankypants, so are you. What happened to all the "investment" and "jobs" Gordo and the rest of his minions bragged about when business taxes were slashed when he first misled the people in 2001? In fact there were more permanent full time jobs created under the NDP, when the economy was just begining to recover, than Gordo and his minions have created since. I wish the NDP would challenge the LIbERalS on this point.
Lets get these LIbERal carpetbaggers out and soon! I'm working hard on the No HST campaign and if this fails I'll work hard on the recall campaign. One way or the other these liars are finished!
sunshine coast girl
2 years ago
Really glad that Gordo isn't quitting....
because I want him to stick around so we can FIRE his sorry ass!
kootenay
2 years ago
Higher Corporate Taxes
Here's a good news story from the newly elected right wing government in Chile. Maybe Gordo and Steve H should go on a road trip and see what they can learn.
Chile’s proposed mining tax increase may cost companies including BHP Billiton Plc, Xstrata Plc and Anglo American Plc an additional $1.2 billion in the next two years as the world’s largest copper-producing nation seeks to finance repairs following a February earthquake.
The increase would add to about $12 billion mining companies will pay in taxes to Chile’s government this year, Alberto Salas, president of the country’s National Mining Society, said in an interview last night in Cartagena, Colombia.
http://www.bloomberg.com/apps/news?pid=20601110&sid=a69sRmrZI4ik
RickW
2 years ago
I guess they will pull right out of Chile now, won't they?
After all, that's the "threat" used by Campbell, business, and rightwingnuts in general, when it comes to corporate taxes in BC.........
Van Isle
2 years ago
Excellent article in showing
Excellent article in showing how our business and political elite are giving us a snow job. I heard a guest earlier this week on the Bill Good show talk about our ponsi global financial situation. He must have pissed off the CKNW producers cuz the fella was cut short; they had breaking news about "the political crisis in Britian". Its too bad that articles like the one above don't hit the mass-media
Skywalker
2 years ago
Good one Kim!
I'm with sunshinecoastgirl on Campbell staying one. I want him to find out just how hated he is for doing so much sucking up to his cronies in the business sector. Nobody is buy the COFI nonsense anymore than they are buying it from the Manufacturers Ass'n, or the BC Chamber of Commerce.
morechatter
2 years ago
You Just Never Know
In BC Politics what may happen as there is more controversay coming up and it just could be the straw that stops Campbell from coming back.
alive
2 years ago
simply wait!
So let them pull out!
Only the rich benefit from mining industry anyway.
The stuff does not go bad if it has to sit in the ground for another few decades untill we get a fair system in place.
Look at the facts
2 years ago
HST
Ok - getting pretty tired of this "us vs. them" view of the HST.
Deal here is that we currently have 2 taxes that tax different things with different rules, employ 2 sets of auditors, 2 sets of bureacrata, etc
The HST is widely endorsed by econmists of all political stripes, will save business and government money, will make our economy more efficient, and will encourage business to invest in their companies (create more jobs, become more efficient, etc)
Don't forget that under either system, there is really only one taxpayer - you. From an overall perspective, taxes aren't going up under HST, and most of the issues are really about special interests or transitional issues
Does anyone really think the current 2 tax, 2 sets of bureaucrats, 2 sets of rules system is actually better?
Frank
2 years ago
Look at the facts
You forgot to mention one fact, the government has said consumers will be paying $2 billion a year more than they are paying now.
Skywalker
2 years ago
The HST benefits some businesses.
That is at the expense of consumers. So it is a tax shift. Subtle and a shift that is based on a big lie. Then they promise us that business will pass on their savings to the consumer...eventually...and eventually pigs will fly. I don't care if there were three taxes rolled into one. If I am paying less with three different taxes then harmonizing them so I can pay more is really pretty easy to understand. So yes look at the facts. If they had made this really revenue neutral for all, you might have a point. As it is you are just another Campbell fan worried about the shit storm he has created. Deal with it, Look at the facts.
RickW
2 years ago
Look at the facts
It's possible you haven't read what Ed Deak (Fiat Lux) has to say of economists (of all stripes).
It ain't called "the dismal sciewnce" for nothing - and anything that is endorsed by economists (of all stripes) should mean the kiss of death.
Frank
2 years ago
Just to add
"Economists" also predicted that Campbell's tax cuts would lead to huge economic growth. And as the article points out, that didn't happen. Liberal growth is still below NDP growth in the 1990s.
Jerry Munro
2 years ago
Still too much hot air over substance...
Ehhhhh, c'mon now. Quit yer whining.
If we are going to save capitalism, such as the rightist Nutlords have brought it to a state of, since the rise of the Neoconazi State out of the collapse of Labour in the 70s, everyone... meaning the working class... is simply going to have to pony up with higher taxes. How else are we going to continue to underwrite the Welfare State for The Rich and save them tax share, which they have created out of the Free Enterprise Spirit of their New World Order? Did you really think there was no purpose to the Neocon decades since the late 70s, and Thatcher, Reagan and Mike Harris?
What? You didn't see it coming?
Then you had your head in that dank,dark pit again, or overly absorbed in Hockey Canada.
Suck it up, suckers. In the end, the NDP will, as it has the GST and Free Trade, and every other major ruling class/neocon change to capitalism and the old social contract since the late 70s. They play the Loyal Opposition role, fer sure, then roll over the day after the election, and play dead in power like all the other status quo parties to capitalism.
As I've been saying all along, the only real choice is the streets and fighting back, or bend over with your trousers around your ankles and take it where the sun doesn't shine in a gay old time. :-)
HST is a done deal this side of capitalism and its bullshite party system soft shoe shuffle about the floor. Gonna take a whole lot more cajones over rhetoric than I read here in the respectable pages of Tyee.
It'll be easy enough to know when something is really happening. As yet, it still ain't.
happy
2 years ago
And on the "flip" side...
I read taxes are going down 3% on booze due to HST
That should save me half a grand right there......
Frank
2 years ago
happy
Approximately $300 a week on booze? No wonder your moniker is "happy".
switek
2 years ago
The author is incorrect.
“Because in fact, COFI members and other forest companies are already largely exempt from B.C.'s current sales tax.” - Kim Pollock
The author is of course referring to the PM&E Exemption under the current PST system. Unfortunately the author EITHER fails to recognize (or chooses to willfully ignore,) that there are MANY legitimate costs that are exempt from qualifying for the PM&E exemption, I will provide a partial list just to illustrate what an irresponsible claim author Kim Pollock has made in this false and misleading statement.
The following are NOT an allowable PM&E exemption and are fully subject to the PST
Construction materials, such as lumber and steel.
Buildings,furnishings, machinery or equipment related to the use of a building.
Machinery and equipment that is used to move material inputs or finished products outside the manufacturing site.
Machinery and equipment used torepair, maintain or service exempt PM&E.
Machinery and equipment usedin construction, such as backhoes, bulldozers, air hammers and excavators.
Machinery and equipment used in providing a service
Machinery and equipment that is not directly used in the manufacturing process
General,administrative and office equipment, such as desks, phones, computers, photocopiers and fax machines.
Generators and alternators (portable or mobile). This includes stand-by and electric generators and alternators and drive motors for them.
Boats (other than boom boats), trains and non-turbine helicopters or aircraft.
Machinery and equipment used to generate heat, such as a boiler (other than when the generation of heat is an integral component of a qualifying manufacturing process).
Scaffolding, walkways, catwalks and similar structures, unless these items are an integral part of machinery or equipment, and are sold or leased as part of machinery and equipment that is exempt.
Storage tanks
Telecommunication equipment, such as satellite equipment, cell phones and radio antennas.
Vehicles designed for public highway use, such as transport trucks.
As you can appreciate the above is only a partial list but certainly would add heavily to any forest companies production costs. Of course the PST paid on these added production costs become incorporated into the selling prices thereby driving up the price and rendering this lumber less competitive with other regions that utilize a different taxation format. Further this process also creates a cascading increase in prices as correctly noted by most economists.
For Kim Pollock to ignore these costs and somehow suggest they do not exist or that a forest company is “largely exempt” is as false a statement as it is misleading. It is unfortunate that this type of misinformation further clouds what should be an otherwise legitimate discussion. Kim Pollock owes readers of the Tyee and apology for such a poorly researched article.
happy
2 years ago
Frank
Half a grand is 500 bucks. Over a year. I'm not that "happy". Yet...
circle A
2 years ago
They write off...
equipment not used for production by depreciation which over time accomplishes the same. i have been selling machinery to the forest industy for 20 years and since they got their pst exemption a few years ago (2003 i think) i don`t recall collecting very much from them. as i noted some time ago on tyee, my coversation with canfors purchasing agent ended with us both having a grim laugh when i asked who was going to pay for social services now that the forest industry was getting such a huge exemption, i was told to take a guess.
Frank
2 years ago
happy
I know, if you're saving $500 a year on a 3% reduction then that works out to roughly $300 a week on booze.
Perhaps your savings is a lot less than you figured?
happy
2 years ago
Uh, now I get ya
I thought you meant 300 a week in TAXES. Sorry Frank, just a silly joke. But if Carole and the NDP get back in I could be driven to consume such vast amounts....(thats a silly joke too)
Cheers
Van Isle
2 years ago
Happy, do you know that the
Happy, do you know that the invention of beer is proof that God loves us and he wants us to be happy too.
happy
2 years ago
Good one Van Isle
If true then the big overlord must love us Canadians way more than Americans since our beers way better!
sunshine coast girl
2 years ago
Just a point of fact....
ALL economists do not agree the HST is the way to go and in fact, it wasn't that long ago that ole "what's his name" didn't think it was either.
Camero409
2 years ago
lookatthefacts
You stated,
"The HST is widely endorsed by econmists of all political stripes, will save business and government money, will make our economy more efficient, and will encourage business to invest in their companies (create more jobs, become more efficient, etc)".
I'm wondering, are these different economists that reported to the government of Manitoba that harmonizing the tax wasn't in the best interest of the province? Are they the same ones that advised the government of Saskatchewan to rescind the HST?
Hmmmm, perhaps the ones he's talking about are from the Fraser Institute......LOL. That would explain his lame post.
G West
2 years ago
Switek
You are familiar with grossing up the costs of purchased capital assets which are then amortized over the life of the asset? I assume you're also familiar with accelerated write-offs of capital costs for taxation purposes and another little corporate bonus known as forward and backward averaging.
Please, don't cry too many rivers for the corporate sector - this latest reach-around IS going to help them - but only to the tune of about $2B - in the long run it won't keep any of these outfits in business if they haven't been using the corporate accounting dodges already available to them and completely out of the question for the consumers who are going to pay that $2B.
crankypants
2 years ago
Happy
I hate to burst your bubble, but there is no reduction in booze prices. Yes Hansen is reducing the liquor tax from the current 10% to the 7% portion of the HST, but they are repricing the price of booze by 3% through the LDB. As a matter of fact they have upped the prices by 3% a couple of weeks ago. And to make matters worse they are still charging the 10% liquor tax until the end of June. An 18 pack of local beer is now about $1.00 more than it was in April.
Jerry Munro
2 years ago
Price of booze....
I know my rare treat bottle of scotch is even yet more expensive... even the lower grade "blended" brands which I am more and more being compelled by my pocket book to drink. (Indeed,I'm drinking more Polish "potato" vodka for the same reason. Though it is all steadily going up in price too.)
One can attempt to put the best face on any aspect of the current neoconazi politics and economics one wants. It simply all comes undone and exposed by everybodies' living reality. We "know" what's happening happy pants wingers. We're living it, and are unimpressed by your soft shoe shuffling.
The System is a vampire everywhere.
DNA
2 years ago
I dissent
As an attempt to go against the group think on this site, let me say that I don't see an alternative to the HST. I think bringing in the HST is a positive move. And I am not a Liberal. (Big L)
Why?
1. The government needs more money. Unless, of course, you want to them to cut health care, education, etc., even more. Or go further into debt and let our kids pay the bills.
2. The government can tax corporations. The result. The corporations either pass on the costs to us (most often), or leave for a tax friendly jurisdiction. Okay, they should stick around and pay more. They won't. That is, they won't pay more than most other places pay.
3. That leaves government to tax us. It can tax
- our income, what comes in
- our wealth, what we have
- our consumption, what we spend
There ain't any other options. And don't pretend the rich can be taxed a lot more than they're being taxed.
4. All taxes distort. Pick your poison.
5. We're a fat society, on the whole (maybe you aren't), so it seems to me that taxing consumption has the environmental benefit of reducing it. I don't really need more stuff. And I don't see the point of people having a lot more money to bid up the price of housing even further.
6. There are rebates of the HST for low income people. Maybe not enough. So we should fight for me.
7. I agree with a writer on The Tyee that we should tax fuel and exempt some of the things that aren't being exempted. That's a fight I'd like to see.
7. I can see why Vander Zalm and a bunch of conservatives want to can the HST, riding a populist wave. VZ wants to cripple government. The Left, it seems to me, want stable government. The NDP's opposition, for instance, is nuts. Cripple government by making it impossible to do anything for people when you eventually gain power?
Okay, you're against the HST. How do you want to raise the money (including the $1.6 billion from the feds)? Or, what do you want to cut. (And don't just say, I'd cut waste... There may be waste, but it's in the tens of millions max,not in the billions.)
But the anti-HST crowd won't say. Never says.
Sort of like the Californians voting, years ago, against residential property taxes. Look at the state California is in now. It' ain't pretty.
TYRONE
2 years ago
The biggest lie - hidden tax is PST? - NOT- it is GST!
I have received a fat letter from my MLA trying to make a point, that HST would do away with 'hidden tax'- this is a blatant LIE!
Here is the truth: GST in the real world is charged each and every time goods change hands. That means, that before you can buy a saw blade, the steel mill, the agent, the distributor, the wholesaler and the laser cutter charge GST on the price they sell it for; i.e. higher each and every time!!! Then the shop finishing the saw blade i.e. sharpen it, set the teeth and even putting carbide tips on also has to charge the wholesaler of the finished product GST, who in turn sells it to a distributor adding GST and the retailer has to pay the distributor GST and finally you purchase this saw blade and, you guessed it, have to pay GST.
Here is now the kicker: All this time there was NO PST charged, because every one has a tax exemption number except you, the customer of the retailer, who is obliged to charge you PST.
GUESS WHAT WILL HAPPEN IF WE HAVE AN HST?!?!?!???
YES, each and every time GST was charged before, now HST would be charged and the prices have no place to go but UP! AND THE PROVINCIAL GOVERNMENT, WHO WAS ENCOURAGED TO HELP THE FEDS ROB US WITH OUR OWN 1.6 BILLION DOLLAR BRIBE IS LAUGHING ALL THE WAY TO THE . . . . that's what you think! We will never see our money again because it will disappear like magic!
FIGHT IT, DAMMIT!
Frank
2 years ago
DNA
1. The government says its revenue neutral. That means the government is not making any money off this tax. Business is reaping the benefits, not government.
2. Corporations don't exist in jurisdictions where they're taxed? I think you need to take a walk outside for a few hours. There's plenty of businesses in jurisdictions where they're taxed, they don't all move to Sierra Leone because they have to stay where their customers are, their workers are and where there's infrastructure to support them.
4. We have.
5. Taxing consumption instead of income means joe average and the poor pay a higher percentage of their income in taxes than the well off. That will increase inequality and increase the hardship on those at the bottom.
"Okay, you're against the HST. How do you want to raise the money"
Leave it the way it is. Business is already paying that $2 billion.
"But the anti-HST crowd won't say. Never says."
And the right-wing crowd, such as yourself, will continue to erect strawmen instead of debating the facts.
G West
2 years ago
@DNA
I had a couple more points to make - largely about the problems with the current system of taxes on incomes - y'know the changes in tax rates at the top of the income brackets that were meant to stimulate the economy and trickle down to the poor and working poor.
To steal from Sarah Palin: 'How's that workin' out for you?'
As for your other points, Frank's covered them with economy and style.
Cheers.
sicntired
2 years ago
What forest industry?
We used to think the forest companies were going to destroy the salmon fishing.It's a toss up which of these once great industries has been harmed the most by this governments lack of policies.I used to know a lot of people who made a good living fishing salmon.They have all sold their licenses and their boats.The forest industry was another thing a lot of friends made a really good living at.The ones that weren't maimed or killed are sitting in the beer parlors all day reminiscing about the good old days.Whole communities have gone under in such a short period of time.I don't know what will be left when this bunch are finally put to pasture but I fear it won't be much.
kb pollock
2 years ago
In response to switek, I
In response to switek, I believe you do protesteth too much.
Perhaps you should refer to the BC Finance Ministry's taxation bulletins on which the story was based. They clearly indicate that things like machinery, equipment, buildings and some vehicles are not subject to PST. That's a big chuck of companies overall costs.
Just to be clear, I didn't say that resource companies are completely exempt from the PST. But since there are some major exemptions, including machinery, equipment, buildings and some vehicles, it's at least worth considering how much this undermines the arguments in favour of the HST.
COFI, the government and others suggest that they pay PST on machinery and equipment but won't pay HST on those items. Since that's untrue, perhaps they are also exaggerating the beneficial effects of the HST in general.
In addition, I noted that since the Campbell government's massive tax-cut regime hasn't had much effect on employment creation or investment in general, perhaps there's no good reason to believe claims that the HST will improve that, either. In fact, I;m not that convinced that either Campbell or corporations care that much about jobs and investment: I think they care most about paying less taxes and making more profits.
The onus is still on them to make the case. So far they haven't.
Kim Pollock