Some follow-ups today on tax issues, as income tax filing time draws near and Premier Christy Clark shovels out surplus money in the run-up to the May election.
• Is provincial sales tax hidden somewhere in residential BC Hydro bills? Several readers contacted me to ask about this.
I’m advised by the B.C. finance ministry that the answer is no. It is charged on business and industrial hydro bills, one of those historical relics of a sales tax that has been stitched together like Frankenstein’s monster over the decades.
When the harmonized sales tax made its brief appearance in B.C., one of the main orders of business was to devise a tax credit so the provincial portion of HST on home power bills would be repaid.
HST follows the rules of the good old GST, in provinces where the HST applies. And that means it is applied on top of all the other taxes on gasoline, and on electricity bills.
This came up when mayors of struggling resource communities pleaded with Finance Minister Mike de Jong to relieve their pulp mills and sawmills from this burden, the only such sales tax in North America.
• Could the zombie HST ever lurch back to life? It’s possible, especially if Clark’s BC Liberals get re-elected.
De Jong set up a Commission on Tax Competitiveness last year, and its report last November built a strong case for what they called a “Made-in-B.C. VAT.”
VAT stands for value-added tax. In principle it’s roughly the same as extending sales tax on services and providing some breaks for goods that carry the load now.
The Frankenstein PST clutches business by the throat, taxing not just huge hydro bills but things like computer software and telecommunications services.
“The commission recommends all capital expenditure by business be exempted as soon as possible,” its report says. “This would be the single most effective short-term tax reform measure to improve competitiveness.”
This is especially urgent as U.S. President Donald Trump prepares to slash the corporate income tax rate, which is currently far higher than in Canada. Listen for a giant sucking sound as our high-tech jobs go down to Washington and California.
• Is the foreign buyers tax, bolted onto the property transfer tax in Metro Vancouver last summer, really working? Yes, and not just as an extra cash cow for the B.C. government.
Metro Vancouver’s average home price dropped 12 per cent from December to January, accounting for most of the six-per-cent decline for B.C. home prices overall during that time.
• Is B.C.’s carbon tax really revenue neutral? The Fraser Institute’s Charles Lammam and Taylor Jackson dug into that, and their answer is no, not any more.
Provincial income tax reductions, five per cent off the lower two brackets, and rural and low-income credits, initially did return all of the carbon tax revenue.
In the past few years, the Fraser Institute economists point out, these measures have fallen behind the growing carbon tax revenue.
The government has maintained the appearance of revenue neutrality by counting other tax credits, some of which were put in place before the carbon tax arrived in 2008.
They counted the small business venture capital tax credit, the training tax credit, the children’s fitness credit and children’s art credit. I guess if your kids play hoops or paint pictures, they’re not riding in your planet-cooking vehicle.
Even B.C.’s extravagant film production tax credit is counted against the carbon tax. So when Hollywood moviemakers fly up from La La Land to shoot scenes, that’s “climate action?”
Tom Fletcher is B.C. legislature reporter and columnist for Black Press. Email: tfletcher@blackpress.ca Twitter: @tomfletcherbc