VICTORIA - British Columbians have voted to dump the HST.
The tax has been killed with 54.73 per cent of voters turning it down, forcing the provincial government to revert to the provincial sales tax and to plug what it has predicted will be a gaping hole in its budget.
Reaction began flowing in immediately after the long-awaited results came in. Voting in the mail-in referendum closed Aug. 5.
The Canadian Taxpayers Federation called the defeat good for democracy, but bad for the economy.
The B.C. Federation of Labour said the result is a "victory for common sense and working families."
The fledgling B.C. Conservatives, whose leader had originally supported the HST, called the defeat of the tax a failure on the part of the B.C. Liberals to convince people it was in their best interest.
Finance Minister Kevin Falcon has said the B.C. government would be looking at a $3 billion hit — including repaying Ottawa the incentive money it forwarded to implement the tax — if voters decided to get rid of the HST.
The net impact of a dropped tax would be an immediate increase in next year's projected budget deficit to $2.56 billion from $925 million, he said.
That would inevitably mean cuts to government programs and a prolonged period of provincial deficits.
Earlier this week for the first time, Premier Christy Clark acknowledged her government had a "Plan B" in case the tax was defeated.
"We've done a lot of thinking about our Plan B, and we've given it a great deal of effort, knowing that it may not be necessary but it's better to be prepared than not,'' Clark said.
"I know what Plan B will look like. If the HST is rejected, we're just going to get to work. We'll just roll up our sleeves and get down to work.''
She didn't provide any details of the plan.
More than 1.6 million people sent their HST referendum ballots back to Elections BC during the almost-eight-week voting period.
That represents just over half the number of people who were eligible to vote and amounts to almost as many British Columbians who voted in the last provincial election.
The turnout for the referendum is considered particularly remarkable given that ballots were mailed in during the summer and with a postal strike getting in the way.
The provincial government had said keeping the harmonized sales tax was crucial to the province's economic future.
Clark had moved to make the tax more palatable by saying she would lower the HST to 10 per cent from 12 per cent by 2014.
"The HST vote proves how powerful direct democracy really is," said Jordan Bateman, B.C. director of the Canadian Taxpayers' Federation.
"The sad thing is that had the government engaged taxpayers in the first place and asked for their approval for a reduced, 10 per cent HST before unilaterally enacting a 12-per-cent HST, taxpayers, businesses and the economy would all be better off today."
Jim Sinclair, president of the B.C. Federation of Labour, said the HST represented an unfair tax shift of $2 billion from large corporations to B.C. families.
"In the end, common sense and the desire for fair taxes prevailed."
The federal government pledged to help B.C. transition back to the PST/GST system.
“We respect the decision made by the people of British Columbia,” said Finance Minister Jim Flaherty’s spokesman Chisholm Pothier. “We will work with the Government of B.C. on the transition.”
Pothier also said the federal government expects the province to repay the $1.6 billion in transitional assistance given to implement the HST, as promised.
Federal New Democrats were congratulating the people of British Columbia on what they call a “historic” victory.
“This referendum was a great victory for British Columbians who believe that honesty is important in politics,” said NDP Deputy Leader Libby Davies. “They have clearly said they want to reverse the Harper government’s cynical move to force the HST on the people of our province. Conservatives better listen.”
Vancouver NDP MP Don Davies said the federal government should erase the $1.6 billion debt now owed to it by the provincial government.
“Small businesses of all types suffered significant losses due to the HST,” he said. “It would be both spiteful and damaging for Harper to now force BC to pay back $1.6 billion, after it was already invested in things like health care and education.”
HST History
- The HST was introduced in July of 2009, but the provincial government did not enact it until July of next year.
- The HST effectively replaced the 7 per cent Provincial Sales Tax and the 5 per cent federal Goods and Services Tax with a combined 12 per cent tax.
- In June of 2010, a petition to repeal HST was submitted to the Acting Chief Electoral Officer. Over half-a-million signatures were deemed valid, achieving the threshold required to call a referendum.
- Several changes have been made to the HST in May of this year. The tax was to be reduced by one per cent by 2012 and a further one per cent by 2014, driving the tax down to 10 per cent overall.
- British Columbians had from June 13 and until August 5 to vote in the HST mail-in ballot referendum to either extinguish or keep the tax.
- A “No” vote meant the HST would be kept.
- A “Yes” vote meant a return to the 12 per cent PST/GST system.
Voting Results Breakdown from Elections BC
With files from Rebecca Lindell, Global News
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