Peace River South MLA Blair Lekstrom has certainly not been in lock-step with the Liberal government on the HST issue, resigning from caucus last year due to the public backlash. He said his government made a mistake by not engaging the public before implementing the tax shift, but he believes it has made an honest effort to engage since he rejoined the party earlier this year.
He said whether that effort has made a difference in the minds of voters, he is not sure.
"Usually in politics you get a pretty good read as to where you think are going, but right now, I'm just not sure how this vote will turn out. It's just too tough to call," said the MLA of 10 years, adding it is reminiscent of the uncertainty and surprise results surrounding the federal election earlier this year.
The government announced earlier this year that if the HST was maintained, it would lower the rate to 11 per cent from 12 percent on July 1, 2012, and then again to 10 per cent on July 1, 2014. Lekstrom said that is huge for businesses in border communities like Dawson Creek that have been advocating for decades for a lower sales tax in order to be more competitive with Alberta businesses.
The government proposes to make up for the resulting loss in revenues by increasing the general corporate income tax rate to 12 per cent from the current 10 per cent on Jan. 1, 2012, and postpone the reduction in the small business tax rate planned for April 1, 2012. Lekstrom said he believes this strikes a fairer balance between consumers and businesses in terms of the extra costs borne as a result of the HST, while still maintaining a competitive tax regime in the province.
He said he believes a repeal of the HST would make the province less productive and competitive. He said the impact to provincial coffers is estimated at $3 billion – including the repayment of the nearly $1 billion the federal government provided to implement the HST – and that will no doubt have impacts on future budgets, especially given his government's commitment to maintain healthcare and education spending.
However, Lekstrom said whatever the outcome is, he was elected to govern and will help to find a way to make it work.
"This is about the people having their say, and me taking their wishes and making it work, and I'm going to do that however the vote turns out."
He added he cannot accept the argument by some with the anti-HST campaign that some in the province didn't receive their ballots and therefore a result to maintain the HST should be overturned.
"You would have to be pretty much in a cave somewhere to not know the HST discussion was going on, that you had to get a ballot, and if you didn't, where you would go to get it."
The uncertainty about which way the referendum will go was shared by Alvin Stedel, a Dawson Creek resident and former city councillor who was at the forefront of organizing public support behind an HST referendum initiative in the Peace region.
"I can't get a sense as to which way it is going to go, said Stedel. I've talked to people on both sides who have changed their minds – some have decided to vote for or against it where they were on the contrary side previously – and for me, it's pretty hard to get a sense on what's going to happen."
He agreed with Lekstrom that the 10 per cent rate would be better for businesses along the Alberta border. However, he said it is presumptuous of the Liberals to assume they will still be in power in 2014 to fully implement the rate decrease.
He added the resulting increase to the corporate tax rate seems to undercut the whole rationale behind the HST.
"It takes away from the whole argument that the reason for the HST was to take the burden off of corporations so they would hire more people and we would end up with more income back."
Stedel said there is no doubt repeal of the HST would impact provincial revenues, but he believes the impact has been inflated somewhat because he is confident the federal government would negotiate with the province on the repayment of the $1 billion in order to curry favour amongst British Columbians.
He said whatever the result of the vote is, he believes the public has been put in a tough spot that could have been avoided if the government would have sought their input.
"If it is defeated, it's going to be a terrible mess to clean it up – a lot of extra paperwork and a lot of extra expense – but if it's not defeated, then it's like the public has just kind of rolled over and accepted it," he said.
However, Stedel said if the referendum proves one thing, it`s that governments cannot ignore the will of the people, and he believes other jurisdictions in Canada are paying attention to the situation in British Columbia.
"Irregardless of whether the HST is kept or not, every government is going to look and say, 'We have to remember that we can't isolate ourselves from the public because the public won't tolerate it,'" he said.
The results of the HST referendum are expected on or shortly after Aug. 25.