Among the many broken promises of the B.C. Liberal government was the surprise sales tax harmonization announcement. While harmonization may bring greater investment and more high paying jobs to the province in the long run, the short run reality is that hard-pressed families will be paying more for many goods and services, and the timing couldn't be worse. Harmonization should only proceed if families pay less in total tax. 

The harmonized sales tax (HST), set to kick-in on July 1, 2010, brings together the 7 per cent provincial sales tax (PST) with the 5 per cent goods and services tax (GST) for one 12 per cent tax paid by consumers. Harmonization removes the PST on business inputs, things like hammers and nails, and gets rid of the web of PST exemptions that create special benefits for some businesses. It lowers costs to business, gets government out of the business of picking winners, and broadens the tax base. However, because of the elimination of PST exemptions, families will pay an additional 7 per cent tax on food in restaurants, new homes costing over $400,000, newspapers, accountant's fees and home renovations – just to name a few. 

Citizens are outraged about harmonization, and rightly so. Harmonizing the sales tax is a significant change from previous government policy and came as a complete surprise. During the recent provincial election, the B.C. Liberals said they would not harmonize the sales tax. This seems to be yet another snap decision made, like the carbon tax, with no consultation by a paternalistic government. This sudden and unexpected turnaround is a slap in the face to all British Columbians. 

Many are asking, why now? The $1.6 billion in transitional funding from the federal government will probably go a long way in helping the provincial government overcome its pre-election, spending-spree-created budget deficit. But it's still money being borrowed by the federal government to bribe the province to harmonize, adding to the federal debt and creating a bigger tax burden for future generations. 

The official reason, however, was to create an investment climate competitive with that of Ontario, which is also implementing an HST on July 1, 2010. But why do we want to be competitive with a 'have-not' province? Why not be competitive with the province right next door – Alberta? It has no PST at all and a higher basic personal income tax exemption. Lowering the PST would be one way to help families bear the burden of higher prices. The Atlantic Provinces did just that when they introduced the HST in 1997. 

A much better tax-cut option, and one included by the Ontario government when it announced the HST, is an income tax cut. Reducing the burden of income taxes for all British Columbians would be best achieved by increasing the basic personal income tax exemption. Right now, the basic personal exemption in B.C. is $9,373, but it is $16,775 in Alberta and even $12,945 in Saskatchewan. There is plenty of room for the government to leave more money in the pockets of taxpaying families, increase the incentive to work, save and invest, and lower the impact of the HST. 

Although the HST may have some positives in the long run, the arrogance of the tax change coupled with higher taxes for consumers make it mandatory for the government cut other taxes. This will get government out of our pockets and allow hard working families to spend their own income in a way that best serves their needs. Moreover, it should be the only way British Columbians should accept the HST.