Excerpt from the Official Report of
DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)


May 29, 2012

Statment on Bill 54 — Provincial Sales Tax Act

S. Simpson: I am pleased to have the opportunity to join debate around Bill 54, the Provincial Sales Tax Act. For those people who might be watching us today, the purpose of this legislation, really, is to restore the provincial sales tax as we move away from the HST — the failed HST.

[1510]

In order to be able to accomplish that, it's necessary to bring back the provincial sales tax, and the purposes of Bill 54 are to, in fact, bring back the

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from the HST, the failed HST.

In order to be able to accomplish that, it's necessary to bring back the provincial sales tax, and the purposes of Bill 54 are to in fact bring back the framework, the structure for what that tax, the new or the revised provincial sales tax, will look like. This tax will come into place with the new or the revised provincial sales tax on March 31, 2013. In a little bit less than a year from now this will be back in place, and it will replace the HST, which will go by the wayside at that time in the form it's in now.

What we know, of course — and I'm sure that most British Columbians know the history well — is that it was one of the most engaged political discussions that we have had in this province in many, many years — maybe the most engaged political debate that we have ever seen on an issue in this province. That was around, of course, the question of the HST, the tax that Bill 54's intent is to replace.

All members here, of course, will know, and the public will recall, that a citizens' initiative was put in place. That initiative led to a referendum vote across the province, a referendum where people lined up on both sides of this issue — whether we should have the HST, the PST. We know that the government side lined up in support of the HST, the opposition in support of the PST. But more importantly, the public and all stakeholders across this province in different areas took different positions.

It was a very vigorous debate that was had across the province, and the result of that debate was a clear majority telling the government of British Columbia, through the referendum and the Referendum Act, that the HST was not acceptable to a majority of people in British Columbia and that it was necessary to go back to the PST, to restore the PST in some form. The result of that is what we have in front of us today, Bill 54, the Provincial Sales Tax Act.

As others have said before, and I would just note this, wherever you landed on this issue of HST/PST — which was the best result to go? — I think everybody — and it's reflected in the legislation that we have in front of us — has to acknowledge that it was quite a remarkable process that engaged British Columbians in the way they were, in a way that we have not seen before in terms of an initiative that led to the public clearly, through a vote, expressing their view on the HST.

Now we have as a result of that — over a very extended period of time, I would note…. And I know that the Minister of Finance has told us, when questions have been raised to him about the complexity of Bill 54 and getting to Bill 54 and to what we have today and the complexity of moving forward to get rid of the HST and to be able to move back to the PST…. And I think that still continues to be a point of some concern, which is the timeline here.

Bill 54 will reinstate the PST as of March 31, 2013. I know that there are many British Columbians who believe that this could have been expedited in a quicker fashion. The minister has certainly defended the view that this is complex and it required discussions with the federal government and it was very layered and required the timeline that we have in front of us with Bill 54.

That's a debate that we could have. But the reality is that, following the vote on the HST, it has been quite an extended period of time to get to where we are today. And we now know, of course, it will be many number of months before we actually get to dealing with the results of that vote in tangible terms, which will be the return to a provincial sales tax model at the end of this fiscal year.

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We know that there are challenges around that, and the government will know. And I know that there were many industries, and some of them were particularly more challenged. And the government was put in a place where it was required to ultimately look at options to deal with some of these challenges. And members of this House would

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there are many industries and some of them were particularly more challenged. The government was put in a place where it was required ultimately to look at options to deal with some of these challenges, members of this House would know — areas like the housing industry and particularly the new-housing industry. It was very challenging.

I know, in discussions that I had with the Urban Development Institute and people in that sector —their concern, once the decision was made to return to the PST, based on the results of the referendum, of the vote — that it had a very challenging impact on them over that period of time. Mostly, as people who know the industry will know — and I know the minister knows this well — pre-sales in the condominium sector are a very, very big part of how financing happens to allow development to move forward.

The banking and the financial institutions in this province have expectations around levels of pre-sales. In order to qualify new developments for their support and for financing, they require levels of pre-sales. It was getting very, very difficult to accomplish because we had people who were waiting and prepared to wait out the HST until the PST was returned, expecting or anticipating, rightly or wrongly, that they would have a better price at the end of the day if they waited for the PST to return and saw that HST tax removed.

It was very challenging. The government, I know, was put in a place where they were required to, in fact, put in place some initiatives that would provide some relaxation for that industry so that they could move forward and we could again have some action around that.

Probably more than anything, particularly…. And I think in some ways it was probably more challenging for the smaller builders, the homebuilders, than it was for the Urban Development Institute and for the large developers. I know from my discussion with them, much of their biggest concern was certainty.

So certainty was the issue, and Bill 54 and what's here has, hopefully, in addition to the initiatives that obviously the government put in place to ease pressures for the housing industry…. Bill 54 is there in the hopes of providing some certainty for that sector.

What Bill 54 does is in large part, as best we can see from the bill, return many of those items back to what might have been — not quite status quo but does return much of that back to the old PST model.

There are a couple of clear differences with the old PST. One is a tax that we know will remain. Interestingly, this was not necessarily part of the HST. But it was a tax that was put in place at that time, around the tax on designated property.

Under the old PST, hon. Speaker, as you'll know, on things like the private sales of used vehicles, there was a 7 percent tax. When the HST was brought into play, because there was no HST on used vehicle sales — that's the nature of the value-added tax — the government put in place an additional 5 percent, which brought the tax to 12 percent on those sales, so that there was a consistency there. Again, this was separate somewhat from the HST, but certainly the motivation for it was the HST, I believe.

So what we had is this 12 percent tax. What we know, hon. Speaker, what Bill 54 tells us, is that 12 percent tax will continue in place. It will not be going back to the 7 percent. It will continue in place. The expectation is this is about a $40 million tax increase across the board that we will see with that tax.

The other thing that we are seeing here is…. There is a series of time-limited exemptions, many of them for energy-efficient products, that were put in place — for example, things like Energy Star appliances. That was put in place, and that exemption has essentially been eliminated.

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So, people know, hon. Speaker, those time limited exemptions that we're seeing being eliminated now, there is quite a list of items that people will now not be able to experience that tax break on. They would include things like Energy Star refrigerators, clothes washers and freezers; Energy Star windows, doors and skylights

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quite a list of items that people will now not be able to experience that tax break on.

They would include things like Energy Star refrigerators, clothes washers and freezers; Energy Star windows, doors and skylights; Energy Star residential heating equipment; energy-efficient residential gas-fired water heaters; energy-efficient commercial boilers; devices which reduce idling by commercial vehicles; hybrid passenger vehicles; the alternative-fuel vehicles; conventional fuel-efficient vehicles that received a rebate based on fuel efficiency criteria that was set under federal programs; energy-power-assisted two- and three-wheel cycles; electric motorcycles; and hydrogen-fuel-cell passenger buses.

This is just a list of some of the things that were on the time-limited exemptions, and we won't see the return of those with the passing of Bill 54.

The other thing that I think we're going to see with this bill, which does create a bit of a challenge, is that while there certainly are items in the legislation that are incorporated into Bill 54 itself as part of the legislation, as part of the act…. For example, the legislation clearly exempts food, fuel, business inventories, manufacturing inputs. It does not impose the tax on real property or services, with some exemptions. So it's clear about that. The challenge that we have, though, is that there's a very long list of items that are going to be required to be put into regulation.

For those people who are following this debate, the difference here between legislation and regulation is, of course, that if they these things are included in the act, if they're included in the bill that comes for debate here in this House, if they're passed by this House, then they are part of legislation, and changes can only be made through an amendment to legislation — an amendment to the act, an amendment to the law.

So if there are items in a list, if there's a schedule attached to a piece of legislation and that schedule is passed as part of the legislation, then we have a situation where in fact it is a fixed list, unless the government of the day wants to bring an amendment or bring a change that would change the nature of that list.

If it's passed through regulation, then it really is a matter of cabinet. It's is a matter of order-in-council, and it's a matter of the cabinet determining what the list is. That change can happen at the cabinet table. It does not necessarily happen in any transparent or open way. It's a list that is produced, and then it will be presented.

We will all become aware of it at the time that it becomes part of regulation and part of law through regulation. But we won't get a chance to, necessarily, have any discussion about what that list looks like at any time, because it is dealt with at the cabinet table — in private, in secret — and then produced and signed into law by the Premier of the day, the minister of the day or whatever.

To give some sense of what we're talking about when we talk about the list for regulation, the regulatory list…. It's quite a long and a broad list of items. We're not exactly sure how they will be affected by this law and whether they will all be incorporated in the Provincial Sales Tax Act as regulations to the act. We're going to have to see.

But to give you some sense, hon. Speaker, of the kind of list we're talking about, it would include residential electricity and home heating fuel; prescription drugs; non-prescription drugs, like vitamins and certain other health care products and appliances; children's clothing and footwear; clothing patterns, fabrics and notions; school supplies.

Also, magazines, books and newspapers; basic telephone and cable services; 1-800 and equivalent telephone services; specified safety equipment; labour to repair major household appliances, clothing and footwear; miscellaneous consumer exemptions — things like used clothes under $100; bicycles; livestock for human consumption and feed, seed and fertilizer; production machinery and equipment.

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Also, insulation to prevent heat or cold loss from hot-water tanks, water pipes and duct work; production machinery and equipment for local governments for power production and cogeneration; aerodynamic devices for commercial vehicles; equipment to produce energy from ocean currents, tides and waves; rental of passenger

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work; production machinery and equipment for local governments for power production and cogeneration; aerodynamic devices for commercial vehicles; equipment to produce energy from ocean currents, tides and waves; rental of passenger vehicles for eight hours or less; biodiesel fuel used for heating; services to maintain or modify software; logging machinery and equipment; mining, oil and gas machines and equipment; and exports.

It's a pretty long list and a pretty broad list that will include a whole lot of our economy and things that are important to our economy. That list isn't here as part of the act. It isn't here as part of a schedule. It isn't a list that we can look at, that the public can look at and say: "Okay, I have an understanding of what's in and what's out."

That is a bit problematic, that we have a situation where we have this list without knowing for certain how each one of those matters will be addressed — and others, I'm sure, that may not be included on the list that I provided here, because it's clearly not an exhaustive list. We're going to have to wait to see — after Bill 54 is passed, the Provincial Sales Tax Act — when the minister and the government bring forward the regulations that apply to Bill 54, apply to the Provincial Sales Tax Act, to determine in fact how those regulations affect people in a substantive and meaningful way.

There are a couple of challenges here. One is, of course, that people would like transparency. They would like certainty. I think they would like to know what's on that list. They would like to know how that list is being addressed. That's particularly an issue — and it goes back to comments I made at the beginning of my comments here — that, I think, creates a bit of a challenge, which is that there was anger.

I think many people would say that when the HST was initially brought in, there was a lot of anger over what was seen as a trust issue about in fact what the commitments of government were prior to the 2009 election and then at the point where the HST was introduced in July of 2009, which triggered all of the actions that followed that and ultimately brought us to where we are today with Bill 54, the Provincial Sales Tax Act. But over that period of time, a lot of that anger, a lot of that frustration….

It was a significant trust issue for many in the public and for many stakeholder groups with the government over their confidence about how tax initiatives and sales tax were being dealt with. That created a real challenge. I know that the government has spent a lot of time since that time. It has, some might argue, largely preoccupied the government for at least the first couple of years of this term, leading up to Premier Campbell stepping down and initiating or probably being the major motivation in Mr. Campbell, the Premier, making that decision.

So today we have Bill 54, and we have a very long list and a whole lot of things that relate to Bill 54, that will be dealt with through the regulatory regime rather than through the legislative processes that we go through here.

Now, hopefully, we will have an opportunity to have some discussion around this and around what that list looks like, to talk in more depth. I know our Finance critic is looking forward to the committee stage of Bill 54 and the opportunity to discuss these matters in some depth. I'm sure that he will take item after item and drill down to find out exactly what the government's intentions are, and I'm sure he will drill down on items that aren't even on this list to find out what the government's intentions are.

The problem here…. And this is a bigger problem than just Bill 54, but it certainly pertains to Bill 54 and our ability to deal with this legislation in a substantive and meaningful way. I heard the Minister of Finance, when questions were raised with him during question period earlier in this session about when we might expect this bill, what the expectations were about how the bill would come forward, how it would proceed….

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Then I know the minister and I know the Government House Leader on a number of occasions told this House that it probably was the single biggest priority for the government — to get Bill 54 done and to get it in front of the House, because it was the priority piece of legislation in many ways for the government

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that probably the single biggest priority for the government was to get Bill 54 done and to get it in front of the House. It was the priority piece of legislation, in many ways, for the government in response to the decision of the public through the rejection of the HST, through the citizens' initiative. We have this piece of legislation for reasons….

I would note that this session started back in October of last year, so we've had a session that's…. It went through a couple of months last year, and then we were back here this spring without a throne speech. It was a continuation of the same session. It took from last October right all the way through till we got, just in the last short while, the minister having Bill 54 ready to introduce to this House and bring forward.

[D. Horne in the chair.]

The challenge we have with this — and I know this comment has been made…. We have about 20 pieces of legislation in front of us, with less than four days now to go to deal with these pieces of legislation. Bill 54 is a very substantive piece, but it is hardly the only substantive piece. There are many others.

Now, we have estimates going on in another House, committee stage in another House and second reading going on here. It really does raise questions as to whether we are going to find the time over the next couple of days to be able to have the due diligence on Bill 54, as we will have a challenge to have the due diligence on a number of other pieces of legislation. But will we have the due diligence in committee stage on Bill 54 to really walk through and look at this list of items that will come in under regulation — not in legislation, not a list that we can look at today, as in a schedule attached to this bill, but in fact as a regulation?

When that happens…. When you have so much of the substance of a piece of legislation that is going to be brought forward at a later time through the regulatory process — through regulation and through order-in-council — it becomes additionally important and an additional priority to make sure that the opportunity in committee stage is there so that the critic and any other member in this House that has questions in relation to this….

We all have heard, since July 23, 2009…. We started hearing about this issue when it was the HST, and we've continued to hear about it right up to where we are today. So it would be very, very positive if we had the chance to really walk through all of these items and understand them fully and had the full amount of time to allow the critic and the minister, primarily — but every other member of this House, should they choose to engage in that — to have a full conversation about Bill 54 and about all those nuances.

This is tax law. Tax law is complicated, and the devil is often in the details when it comes to tax law. It requires that kind of conversation so that people understand where those nuances may be and then can make their own determination as to how they feel about those matters and about the act itself.

My concern is: are we going to have sufficient time to be able to deal with 54 in the committee stage in a way that's satisfactory to the people of the province and to the expected processes of this House and the due diligence that I think everybody in this House would agree should be applied to any piece of legislation that comes forward?

Our obligation as legislators, whether it's government side or opposition side, is to fully canvass every piece of legislation to ensure that we are delving into it, to ensure that as opposition members we have a sufficient sense of the bill and the ability to ask those questions that the public doesn't get a chance to ask and that they expect us as their representatives to advance on their behalf — that we're asking those questions.

It's equally important to give the minister the full opportunity to answer those questions in a complete and wholesome way so that the public out there can have confidence as to what this really means. We don't always know that.

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We have a Finance Minister here who's certainly very capable of doing that and of answering those questions in a complete way and able to provide pretty full information — if for no other reason, I think, than the public education that goes with that over questions around the HST/

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way and to be able to provide pretty full information, I think if for no other reason than the public education that goes with that over questions around the HST/PST that all is muddled up in Bill 54. It becomes increasingly important, I think, because it goes back to the question that I referenced before, which was the trust issue that relates to the HST and everything that has unfolded since the summer of 2009, getting us to where we are today with Bill 54.

I have to believe that members on the government side…. I think I've heard the minister say that he would have liked to have got this done sooner because of the difficulties around this and with the public. I think the minister fully understands the issue of that trust and the importance of the government to be very clear with people on all the questions that the public might have around how this bill will bring us back to PST and what the changes and the adjustments and the differences will be between what the PST was pre-HST and what the PST will be after March 31, 2013.

There are differences. Some of them are important differences. In fact, it appears from the legislation — I expect that the regulations will be as we anticipate them to be — that much of it will be very much the same as it was prior to the HST and the 2009 election.

We're going to be looking for that, but again, it has to happen in a way that allows that conversation to go on in a meaningful way around the committee stage.

I think that the important thing that I would say, the last point that I would make about this is that it is a piece of legislation. Obviously, this side of the House, the opposition, was opposed to the HST. We supported and we campaigned for a return to the PST. Bill 54 substantially gets us to that place. There are questions to be asked, but we are supportive of getting back to a different tax regime, a tax regime that is based more on the PST model. This bill — Bill 54, the Provincial Sales Tax Act — will largely take us to that place and to where we need to be.

I look forward to the conversation in committee stage. I do hope that this bill does get fully canvassed in committee stage. We'll just have to see over the next couple of days how that goes. I look forward to March 31, 2013, when this is implemented, and then the next couple of months after that will be a time where we'll see, hopefully, effective change in British Columbia and be able to move forward from there. Thank you very much, hon. Speaker.

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