Opinion

'Creating Jobs' Is Biggest HST Con Job Yet

There's scant evidence the $2 billion tax shift onto families will create more pay cheques.

By Jim Sinclair 6 Jul 2011 | TheTyee.ca

Jim Sinclair is president of the British Columbia Federation of Labour.

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HST backers make varying and unproven claims for employment growth.

When B.C.'s big businesses heard about the HST they couldn't believe their ears. The Liberal government would get the public to pay $2 billion more in taxes so business could have another $2 billion annually in annual tax cuts. It was just too good to be true. But the Liberals and business groups knew they couldn't sell the tax to British Columbians with that argument. So government and corporations have spent millions telling us the HST is really about creating new jobs and we should support it for that reason.

But what if it won't create a single new job? What if the HST only represents the biggest tax shift ever seen in British Columbia -- where a $2 billion tax burden is transferred each and every year from businesses onto ordinary working families and individuals?

If the latter is true -- and analyses by the B.C. Federation of Labour have reached this conclusion -- then it's doubly bad for British Columbians and for working people.

And that's why we should vote YES to scrap the HST in the referendum now underway.

Throwing around loose job numbers

The B.C. Liberals and their corporate backers want us to believe lots of new jobs will be created by the HST -- though they're not sure how many.

In March 2010, the B.C. Liberal government paid $14,000 for a study written by Jack Mintz, the University of Calgary professor and long-time advocate of corporate tax cuts. Mintz claimed "a net increase of 113,000 jobs" would occur over the next decade if B.C. kept the HST.

A few months later, Gordon Campbell, the former premier, threw that number out the window. Speaking in November 2010 at the Union of B.C. Municipalities convention, Campbell confessed that the HST might produce only 50,000 new jobs.

And this past May, yet another government-commissioned report said that even Campbell's much-reduced figure was too optimistic. Chaired by Jim Dinning, a former Progressive Conservative cabinet minister in Alberta, the so-called "independent panel" concluded that as few as 24,400 "more jobs" would be created under the HST, as opposed to what would happen if B.C. went back to the old Provincial Sales Tax.

Like the earlier numbers of 113,000 and 50,000, the new Dinning figure of 24,400 was spread over a 10-year period.

The Harmonized Sales Tax, in other words, might -- possibly -- create an average of 200 jobs a month over the next decade. That sounds good, but B.C.'s population is above 4.5 million, and our labour force is about 2.5 million people. While we shouldn't sneeze at a couple of hundred new jobs every 30 days or so, who knows if that tiny number is reasonable to expect from the HST? And even if it did happen, the public cost over the same period works out to $833,000 per new job created. Surely we could create jobs at a lower cost.

Big business saves big

Reducing the tax burden on corporations -- a decade-long mission for Gordon Campbell, Christy Clark and the B.C. Liberals -- is the main focus of B.C.'s Harmonized Sales Tax.

Indeed, while the Campbell-Clark government is uncertain as to how many new jobs the HST will create, they're definite about the benefits awaiting their industrial and business supporters.

Companies in the construction sector annually will save under the HST -- and, the following numbers were provided by the Liberal government -- $880 million.

Transportation firms now will keep the $210 million that they used to pay in sales taxes each year -- taxes that helped to pay for health and education, the justice system and, oh, yes, the roads and bridges used by trucking companies.

B.C.'s manufacturing and forestry sectors each will save $140 million year after year.

Corporations involved in mining, oil and gas will see their annual tax bills reduced by $80 million, and all B.C. businesses together will enjoy yearly "administrative savings" of another $150 million.

All told, big B.C. companies will pay $2 billion less in sales taxes each year, every year, with the shortfall made up by families and individuals paying the HST.

Let's be clear: the HST is a great windfall, a giant bonanza for big corporations.

But will the HST even create the paltry 200 jobs every month for the next 10 years?

To answer these questions, we merely have to look at the recent past.

Corporate tax cuts have not delivered jobs

Thirty years ago, in 1980, the number of British Columbians with a job (full-time and part-time) stood at 1,266,400. By last year, 2010, that number had grown to 2,256,500.

It's easy to calculate job creation over the last three decades: we only have to subtract the former number from the latter. By doing so, it becomes evident that the number of new jobs created in B.C. over the last 30 years was 990,100.

That works out to an annual average of 33,000.

It's reasonable to think the pace of job creation has quickened in recent years. After all, a decade ago, immediately after winning election to government, Gordon Campbell, Christy Clark and their B.C. Liberal colleagues ruthlessly slashed corporate taxes with the stated aim of stimulating the provincial economy.

So, how many new jobs were created in the last five years under the B.C. Liberals?

In 2005, the number of British Columbians who were employed (full-time and part-time) was 2,091,900. And, as stated earlier, in 2010 there were 2,256,500 people with a job.

We can see, after subtracting the former number from the latter, that 164,600 new jobs were created over the last five years.

That's an annual average of almost 33,000 per year.

In other words, the average number of new jobs created over the last five years, 33,000, is identical to the average number created over the last 30 years.

Exactly what, therefore, were the benefits British Columbians received from the B.C. Liberals' decade-long tax-cutting spree?

HST fits long pattern of tax cuts for business

Days before we vote in the HST referendum and either accept or reject a massive, $2 billion tax-shift from businesses to families and individuals, we should re-examine the array of business tax cuts the Campbell-Clark Liberals have instituted over the last decade.

In the summer of 2001, weeks after winning the general election, the B.C. Liberals slashed the corporation income tax rate from 16.5 per cent, to 13.5 per cent. It stands today, after four further reductions, at an even 10 per cent. The revenues lost to the provincial treasury from these corporate income cuts: approximately $650 million, each and every year.

The corporation capital tax also was narrowed and reduced in 2001, and then abolished entirely in 2009. At one time it generated more than $400 million annually.

The sales tax was removed from production machinery and equipment in 2001 at a cost of $160 million, each and every year. That exemption was expanded in 2002, at a further cost to the provincial treasury of $15 million annually.

In 2008, the B.C. Liberals slashed the school-tax rate for large industries, and in 2009 they provided a new tax credit for major industrial and light industrial properties. The former move cost the provincial treasury $24 million annually; the latter, $52 million.

Space does not permit an exhaustive listing of all the tax cuts and reductions handed over to the business sector by the B.C. Liberals over the last 10 years. The list is lengthy and costly.

$12 billion already given away, for what?

The B.C. Federation of Labour has prepared an analysis that calculates revenue losses for the provincial treasury since 2001 from reductions in the corporation income tax rate alone at between $7.7 billion and $8.5 billion.

The total cost of all of the B.C. Liberal corporate tax cuts over the last decade may only be estimated; it almost certainly is no less than $12 billion.

Again, what did British Columbians get for this massive expenditure? We clearly didn't gain the new jobs as promised, because the B.C. Liberals' record on job creation over the last five years has been no better or different than the provincial average since 1980.

Despite spending billions of dollars on corporate tax cuts, the B.C. Liberals created no more jobs in the last decade than did Social Credit in the 1980s or the New Democratic Party in the 1990s.

The Harmonized Sales Tax is yet another in a long, long string of corporate tax cuts instituted by Gordon Campbell, Christy Clark and the B.C. Liberals over the last 10 years.

Their earlier tax cuts created nary a single new job, so why would reasonable, rational people expect anything different from the HST?

British Columbians should vote YES in the HST referendum -- YES to get rid of the HST, YES to stop the massive, $2 billion tax shift from corporations onto working families, and YES for tax fairness.

And, let's start thinking about how to create new, decent paying jobs.  [Tyee]

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