VICTORIA \u2014\u00a0Premier David Eby brushed aside concerns this week that\u00a0his decision to apply\u00a0the\u00a0provincial sales tax to services used by\u00a0business\u00a0will\u00a0be counterproductive to\u00a0the\u00a0NDP government\u2019s\u00a0drive to improve investment and economic growth.<\/p>\n
\u201cWe made, frankly, a difficult decision\u00a0to add\u00a0the\u00a0PST to\u00a0accounting and\u00a0other professional\u00a0services,\u201d said Eby.\u00a0\u201cIt is an\u00a0additional\u00a0burden on the business community, but there are benefits that flow to the business community through the budget as well.\u201d<\/p>\n
Finance Minister Brenda Bailey went\u00a0so far\u00a0as\u00a0to argue that the tax change would\u00a0benefit\u00a0business\u00a0in a roundabout way.<\/p>\n
\u201cWe\u2019re\u00a0doing it not because we want to.\u00a0We\u2019re\u00a0doing it because we need to,\u201d said Bailey.\u00a0\u201cWe continue to protect and expand health care. We continue to invest in education.<\/p>\n
\u201cIt\u2019s good for the business community. Can you attract people when they can\u2019t find a doctor? No. Can you attract people when their kids aren\u2019t getting what they need in schools? No. We proudly stand by this budget. It also helps the business community.\u201d<\/p>\n
Both were responding to Tuesday\u2019s call from a dozen and a half business organizations for the government to cancel plans to apply the seven per cent sales tax to inputs essential to business expansion, investment and growth.<\/p>\n
\u201cThis government does not have a revenue problem. It has a spending problem,\u201d said Bridgitte Anderson, CEO of the Greater Vancouver Board of Trade and host of the \u00a0news conference.<\/p>\n
\u201cAt a time when\u00a0we are facing tariffs, economic\u00a0uncertainty\u00a0and higher borrowing costs, layering on the new PST makes B.C. a harder place to build\u00a0and\u00a0to\u00a0export from.\u201d<\/p>\n
\u201cCompetitiveness comes down to cost, speed, and certainty. This measure pushes all three in the wrong direction. It raises input costs, slows decisions to hire and invest, and adds administrative burden for thousands of businesses.\u201d<\/p>\n
The business leaders provided Eby with an easy out on one point. They indicated a preference for value-added taxation like the abandoned harmonized sales tax, or HST, over the tax-atop-tax variation that is the PST.<\/p>\n
\u201cI understand\u00a0there\u2019s\u00a0a call to reinstate the HST,\u00a0\u201d\u00a0said the premier. \u201cThe answer is no.\u00a0Reinstating the HST is a non-starter for us.\u201d<\/p>\n
On a positive note, Eby pointed to\u00a0government\u2019s\u00a0creation of a $400 million account to underwrite \u201cstrategic\u00a0investments\u201d in selected industries.<\/p>\n
\u201cThat is going to anchor major investment in B.C. and help us\u00a0participate\u00a0in the federal government\u2019s commitment to spend\u00a0five per cent\u00a0of GDP\u00a0on\u00a0biodefence,\u00a0marine\u00a0defence, shipbuilding, and other investments,\u201d Eby told reporters.<\/p>\n
\u201cAlso in the budget legislation\u00a0are the tools that allow us to\u00a0not just write a cheque to a company to\u00a0locate\u00a0in B.C., but\u00a0actually to\u00a0participate\u00a0with the company on behalf of\u00a0British Columbians\u00a0as that company delivers profits and opportunity.\u00a0That\u2019s\u00a0through things like loans, through taking equity in the companies,\u00a0and also\u00a0through profit participation.\u201d<\/p>\n
Eby\u00a0insists\u00a0that\u00a0the money\u00a0won\u2019t\u00a0be available\u00a0to just\u00a0anybody.<\/p>\n
\u201cProjects still\u00a0have to\u00a0stand on their\u00a0own,\u00a0they\u00a0have to\u00a0be profitable. They need a solid business plan.\u00a0They\u2019ll\u00a0have to qualify.\u00a0They\u2019ll\u00a0need strong partnerships like the federal government and deliver real economic value for\u00a0British Columbians.\u201d<\/p>\n
None of those guarantees were\u00a0spelled out\u00a0in the enabling legislation for the fund, introduced\u00a0last week\u00a0along with this year\u2019s budget.<\/p>\n
When passed by the NDP majority, the legislation will\u00a0allow the finance minister to\u00a0tap\u00a0the $400 million account to provide grants, make loans, and\u00a0acquire\u00a0equity in \u201celigible recipients\u201d in the\u00a0realm of \u201cstrategic investments.\u201d<\/p>\n
\u201cEligibility\u201d and \u201cstrategic investments\u201d will be defined at a later date by the treasury board committee of the cabinet, which will also have\u00a0the\u00a0power to\u00a0oversee\u00a0any payouts, guarantees and terms.<\/p>\n
The NDP cabinet members on treasury board are given a free hand to define eligibility\u00a0and strategic investments\u00a0and dispose of the $400\u00a0million\u00a0largely\u00a0as they see fit.<\/p>\n
The legislation says they \u201cmay make different regulations for different eligible recipients, strategic investments, purposes or things, or different classes of eligible recipients, strategic investments, purposes or things.\u201d<\/p>\n
The cabinet committee can also apply approvals retroactively to\u00a0agreements\u00a0by\u00a0current and former NDP jobs ministers going back eight years, to April 1, 2018.<\/p>\n
In short the bill, No. 3 on this year\u2019s legislative agenda is another blank cheque, typical of this NDP government and an opportunity for lobbyists.<\/p>\n
Given this\u00a0government\u2019s preference for\u00a0announcing\u00a0funding when flanked by recipients who\u00a0validate\u00a0the wisdom of\u00a0NDP\u00a0decisions, you can think\u00a0of\u00a0this\u00a0as a validator-recruitment act.<\/p>\n
The expansion of the PST is budgeted to raise about\u00a0$1.5 billion\u00a0over the next three years, much of it from taxing services used by\u00a0businesses\u00a0large and small.<\/p>\n
The New Democrats\u00a0will\u00a0skim off $400 million and return it to\u00a0\u201celigible\u201d\u00a0recipients, meaning those\u00a0that agree to\u00a0play ball by standing\u00a0on public platforms to\u00a0praise the government\u00a0in exchange.<\/p>\n
Good news for those who get the nod from the cabinet for a piece of action. Less so for the businesses and other taxpayers forced to help top up the $400 million fund.<\/p>\n