TAX NEWS - June 2010

Canada Tax: Lekstrom resigns from government over HST

Peace River South MLA and Energy Minister Blair Lekstrom rocked the provincial government last Friday (June 11) by stepping down over concerns about the harmonized sales tax (HST).

"My decision to resign from cabinet and the B.C. Liberal caucus was very difficult, but I fundamentally disagree with the direction our government is headed on the HST," said Lekstrom in a statement released to media early on Friday morning. "I have reached a point where my beliefs and values no longer align with my government."

Lekstrom may be following the lead of his constituents, 4,985 of whom have already signed the petition for former premier Bill Vander Zalm's Fight HST campaign. That number eclipses the 4,801 votes Lekstrom received to win the riding in the May 2009 election.

The news came as a surprise to Premier Gordon Campbell, whose party now sits at an historic low in the polls, with several other party MLAs facing similar levels of voter discontent with the tax. Despite the defection, Campbell said he plans to forge ahead with the HST.

"I respect his decision," he told reporters. "I'm disappointed by it. I would have preferred him to stay ... but he felt personally he could not remain."

Lekstrom, who voted for the legislation that enabled the HST last spring, told media he'd like Campbell to delay the HST for six to 12 months while consulting the public on ideas for a better taxation system in B.C. Under B.C.'s Recall and Initiative Act, the Fight HST petition could force an anti-HST bill into the legislature or trigger a province-wide referendum in the next 15 months.

Of the $1.6 billion received by the province from the federal government after signing an agreement to introduce the HST legislation last year, $1.2 billion has already been spent or budgeted – a factor that could add difficulty to any attempts at repealing the tax.

Lekstrom is the former mayor of Dawson Creek and a popular three-term MLA who garnered nearly 70 per cent of all votes cast in the riding during the last election. The loss of the local MLA as energy minister will be significant for the Peace, but current Dawson Creek mayor Mike Bernier said he'll work to immediately engage Lekstrom's replacement in cabinet.

"My job now is to get ahold of Bill Bennett, the new Minister of Energy, Mines, and Petroleum Resources, to remind him that we are the hub of oil and gas activity in B.C.," said Bernier. "I'm going to invite him up here right away because this will be a new portfolio for him."

Lekstrom had previously indicated to Bernier his concerns over the HST, and was upset to learn the tax would hurt car dealers in his riding.

"For the last couple of weeks to a month, Blair has been saying that he thought this might not be working.. being a border community, it could be problematic for us, maybe more so than people down in the Lower Mainland," said Bernier. "Obviously it got to the point where he thought he had to pull the plug."

"The community supports (Lekstrom).. he's made the decision that he thinks is the right one based on what he's heard from people."

When the legislature resumes in the fall, Lekstrom will sit as one of two independent MLAs in the legislature, along with Delta South MLA Vicki Huntingdon.