Passing the buck

The harmonized sales tax could mean increased costs for apartment renters, according to the executive director of the Tenant Resource and Advisory Centre. In an interview yesterday morning on Public Eye Radio, Martha Lewis said electricity and maintenance fees - which were exempt from the provincial sales tax - will increase by seven percent under the new regime. And apartment owners could trying passing those increases onto their tenants.

Ms. Lewis noted landlords can usually only raise rents by the rate of inflation plus two percent each year. But they can also ask government to allow a bigger boost if there's been an "extraordinary increase in operating expenses."

In Ontario, rental housing providers estimated their province's harmonized sales tax could result in rent hikes of up to three percent. And, if something similar happened in British Columbia, Ms. Lewis said the results could be devastating for some British Columbians.

"We know that all lower income people and those on fixed income - such as retired people or people living on disability pensions - they're all renters," stated Ms. Lewis. "If you don't have money, you definitely can't afford to buy in this province. And those people are hardest hit by any increase in costs in any area of their lives. And rent, of course, is not an option. You need a place to live."

1 Comment

An angle that hasn't generated much attention so far (perhaps because there is no single voice that speaks for the entire services sector?) is that the HST also seems to represent a massive tax shift from manufacturing and other industries that depend heavily on goods and capital inputs to the huge and growing services sector and other industries that rely more on human inputs. Businesses where HR costs are the primary inputs will save very little by being able to write off PST on inputs to offset the extra PST they must start charging on their own sales. They will therefore have to pass on all or most of the extra 7% to customers, which could have quite an inflationary effect overall when you look at how much of our total economy such businesses represent. I'm no economist, but wouldn't this also put BC at a disadvantage in trying to attract exactly the kinds of labour-intensive industries that are most likely to create new jobs? And BC is already a relatively costly place to live and do business, so raising the costs of everything from housing employees to accounting, legal and other business services does not seem to me to be a very good way of making us more competitive and trying to stimulate our economy.

It really seems to me that the Premier and Minister Hansen are using a 19th-century industrial (and social) model to conclude that this particular tax would be good for BC.

I'm also a little concerned that so little of the debate and news coverage so far has focussed on the negative impacts to consumers, given that the harshest impacts will be on consumers and on other individuals and families who are the ultimate victims of expected business impacts. Why so little attention to the consumer angle in all this? E.g. impacts on youth & students, on lower-income families & seniors on fixed pensions, for people on EI, self-employed/ service contractors, and all those already working on the edge of poverty for minimum wages in restaurants, hospitality and other service industries, who will quite likely face layoffs and/or income cuts because of the new tax?

We can already see from various petitions and polls that the average consumer is pretty upset about expected effects across the board. But the standard media reporting format seems to require a formal PR campaign from a non-existent "Consumers Association of BC" before it can give equal attention to consumer concerns. (And no, the Taxpayers Federation does not speak for consumers, at least not those below the $90,000 tax bracket!)

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