VICTORIA — British Columbians have voted to dump the HST after a historic referendum that will force the government to revert to the provincial sales tax.
The tax has been killed with 54.73 per cent of voters turning it down and requiring the government to plug what it has predicted will be a gaping hole in its budget.
Finance Minister Kevin Falcon said he was disappointed, “but not all together surprised.”
Going into the campaign, he said British Columbians were opposed to the tax by more than 80 per cent, so the referendum results represent a gain.
But the change was still not enough, he acknowledged, before beginning to lay out the government’s Plan B.
Falcon said the province will begin the process of restoring the PST back to the way it was, with all the same exemptions. The PST would be completely restored within 18 months, he said.
“We reserve the right to make some administrative changes, mostly of a relatively minor nature, mostly to just bring, as best we can, 60-year-old legislation into the 21st century,” he said.
The voting results showed only 25 of 85 B.C. ridings voted to keep the HST, and all of them are held by the governing B.C. Liberals. Many other Liberal-held ridings voted to reject the tax.
Former finance minister Colin Hansen’s Vancouver-Quilchena riding voted heavily in favour of the HST, with 62.4 per cent wanting to keep it.
The highest support for the HST was in the West Vancouver-Capilano riding of Ralph Sultan, with 64.5 per cent support.
Traditionally strong NDP ridings in Surrey and East Vancouver generated the highest HST rejection counts.
NDP MLA Sue Hammell’s Surrey-Green Timbers riding posted the highest anti-HST votes at 75.5 per cent, followed by the Vancouver-Kingsway riding of NDP leader Adrian Dix at 72.4 per cent and Harry Bains’s Surrey-Newton riding with 72.2 per cent.
The government’s opponents were jubilant at the long-awaited result. Voting in the mail-in referendum closed Aug. 5.
The Opposition NDP and the B.C. Federation of Labour said the move will be good for communities and families.
Dix accused the Liberals of spending a decade shifting the tax burden onto B.C. families.
“A return to the PST will be good for communities, good for families and good for small business. It will make life a little bit more affordable for working families,” he said. “It will also ensure that British Columbia has control over its sales tax policy, now and in the future.”
The federal NDP demanded the federal government not force British Columbia to pay back the $1.6 billion.
The Canadian Manufacturers and Exporters and other business groups say the tax’s defeat will cost investment and jobs, and comes at a time when the world is teetering on a potentially devastating double-dip recession.
The manufacturers said their industries are faced with increased global competition, protectionism, high commodity costs and a high Canadian dollar. The HST would have helped competitiveness and to protect jobs.
The B.C. Chamber of Commerce said there is a clear need for changes to the PST.
President John Winter said the referendum “is a disappointing decision that will have a profound impact on the economy, on business, on workers and on unions.”
The Canadian Taxpayers’ Federation B.C. director, Jordan Bateman, said the HST vote proves direct democracy is powerful.
“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.”
However, 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.”
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.