Canada Tax: B.C’s anti-HST crusaders won’t heed Ontario’s tax rage alert

VICTORIA - Amid all the complaints about harmonization of the sales tax in Ontario two years ago, the powerful autoworkers union cautioned labour and progressive forces against joining what amounted to a tax revolt.

“We want a strong civil society and that must be supported by taxes,” CAW president Ken Lewenza told 700 delegates to the union council in December 2009, where he warned against falling into the trap of “tax rage.”

Addressing provincial New Democratic Party leader Andrea Horwath on a subsequent occasion, Lewenza was equally direct.

“Andrea, the harmonized sales tax, as unpopular as it may be, cannot be an issue from the progressive side,” the Toronto Star quoted him as saying. “The NDP is never going to get elected on a revolt on taxes.”

Lewenza and the other leaders of the union were armed with a more extensive analysis of the risks from Jim Stanford, the CAW director of economic, social and sector policy and a leading economists on the left.

“The anti-HST campaign, by fanning the flames of ‘tax rage’ among Ontarians, will likely undermine the coming fight to preserve public programs and services,” he wrote in an 11-page submission dated Nov. 27, 2009, and addressed to a wide range of union worthies.

Stanford had consulted with the union’s national executive board, other public sector union leaders, progressive tax and social policy experts and his own colleagues in the research department.

“Most share my concern that the anti-HST campaign, by tapping into a conservative anti-tax sentiment, risks doing significant damage to our social programs and the tax base for those programs.”

His analysis incorporated strong arguments in favour of value-added taxes like the HST, many of them similar to ones made by other economists.

The HST would be more efficient, it would spread the tax burden more fairly across all economic sectors and eliminate the hidden taxation associated with the old PST.

Based on the experiences from provinces that harmonized earlier, there would be “no measurable negative impact on consumers or the fairness of the tax system resulting from replacement of the previous PST with the new HST.”

Still Stanford did not endorse the tax. Rather he urged the union and its members not to participate in anti-HST activities. “The HST is not the issue on which we should focus our energies; there are many more important battles to fight.”

Nor did he extend his analysis beyond the boundaries of Ontario. “The issues are somewhat different (and the financial effects are certainly different) in B.C., and thus the B.C. situation requires a separate analysis.”

Still his analysis of a year and a half ago generated ripples in B.C. this week, when it was distributed by the pro-HST forces. By one of those amazing coincidences, the CAW’s Local 111, representing bus drivers in Metro Vancouver, was distributing anti-HST leaflets to commuters Wednesday.

Given the context, Stanford was understandably cautious when interviewed on radio station CKNW.

“You have your own political world out there,” the Ontario-based Stanford told host Bill Good. “The economics are different. The politics are different.”

On the economics, he emphasized that a manufacturing-dependent economy such as Ontario will be a bigger winner from a value-added tax than a resource-based economy like B.C.

On politics, he wisely took a pass on trying to untangle the unique dynamics of B.C. But after reading through his analysis of the situation in Ontario, I was struck by several valid points of comparison to the anti-HST campaign here in B.C.

“A strange coalition of right-wing and left-wing forces has come together to fight the HST,” wrote Stanford back in the fall of 2009. “Political opposition to the HST does not reflect a well-considered call for a fairer tax system. It’s more about electoral gamesmanship by opposition parties eager to damage the current government.”

His warning about the consequences of joining in such a reactionary campaign may apply to the situation in this province as well, much as the CAW and its trade union allies (the relatively silent B.C. Government and Service Employees’ Union appears to be the major exception) are doubtless hoping that won’t be the case.

“When the anti-HST coalition tries to tap into knee-jerk anti-tax sentiments to win more votes, it also encourages a regressive, potentially dangerous attitude to government and the public services those taxes support,” warned Stanford.

“We’ll pay dearly for that kind of attitude in coming years. Progressive forces will face an intense and challenging battle to preserve public services against budget cuts, fighting back against right-wing forces that want to downsize public services and programs in the face of current budget deficits.”

It can’t happen here — leastways not as a result of opposing the B.C. version of the HST — insist the trade unionists, New Democrats and progressive political activists who’ve flocked to the Bill Vander Zalm-led anti-harmonization crusade.

Given that they may well manage to overturn the tax in the current referendum, the months ahead should tell if they are right about there being no downside to joining a tax revolt.

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