Glowing HST report too little, too late

There are two big problems with the economic analysis the government released this week to try and win support for the HST.
It's a year too late.
And it only addresses the questions the Liberal government wanted answered - not the issues British Columbians have with the new harmonized sales tax.
The approach to HST represents one of the great government fumbles. The tax isn't an easy sell, but in Ontario and the Atlantic provinces the governments figured out a way to take it to the public for a real discussion.
Not here. The Liberals vowed not to introduce the HST during the election campaign 10 months ago because it would be bad for B.C.
Weeks after winning the election, they decided to bring in the tax. According to the Liberal line, which isn't convincing many people, they had some sort of epiphany in the weeks after the election.
The HST was suddenly revealed to be not just OK, but critical to the province's future.
The analysis from Jack Mintz, a University of Calgary economist and former head of the C.D. Howe Institute, supports the decision. The government paid him $12,000 for a 12-page report on the impact of the new tax.
It's a great move, he concluded. The HST shifts the costs of government services from businesses to individuals and families.
Companies will pay less tax in capital investments in B.C. - things like new equipment or expanded operations. Lower taxes mean higher return on investment, so companies will choose to invest here rather than in some other jurisdiction. That, mostly, creates jobs.
Mintz estimates that by 2020 the HST will have resulted in $11.5 billion in additional capital investment - new equipment and factories and business start-ups.
Overall, Mintz predicts, the tax will mean a net additional 113,000 jobs by 2020. That's about five per cent more than the current number of jobs.
Mintz has a PhD in economics. I have an English degree and one economics course.
But there are a couple of legitimate questions here.
If the HST was such an obvious way to attract $11.5 billion in investment and bring 113,000 new jobs, why weren't Gordon Campbell and Hansen alert to that possibility a year or two ago? How could they be clued out about the benefits?
And given that this is a big change - a $1.9 billion a year tax shift from business to individuals and families - why is the first analysis being done nine months after the government decided to bring in the new tax?
According to Campbell, the government didn't one study or review of the impact on British Columbia before it decided to introduce the tax. That's an admission of incompetence.
The other problem is that the Mintz review doesn't look at the impact on ordinary British Columbians.
Budget documents show most British Columbians - aside from the poor - will pay more in total taxes to the provincial government this year, with the HST the biggest factor.
The budget offers six examples of the way different people will be affected. Seniors with an income of $30,000 and a single person with income of $25,000 will pay less.
The other four examples provided will pay between 2.1 per cent and and 6.2 per cent more. A family of four with a household income of $60,000 faces a 5.4 per cent increase in provincial taxes and fees.
The review doesn't analyze the higher cost of living as a result of the tax, which TD Economics put at 0.7 per cent. And it doesn't offer any information on the effect on wages.
The HST is quite likely a positive measure.
But the questions for the Liberals remain. If the HST was so great for B.C., why did Campbell reject it during the election campaign? What sort of government introduces a huge tax change with no studies or consultation?
And how can the public trust a party that promises one thing, and does the opposite?
It will take more than a 12-page report to answer those questions.
Footnote: In the small world department, Mintz is a director of Brookfield Asset Management, the effective controlling shareholder in Western Forest Products. WFP was enriched by some $200 million by then forest minister Rich Coleman in 2007, when he released land near Victoria from tree farm licences. The provincial auditor general, in a scathing report, said there was no justification for the gift, no effort to ensure benefits for the public and a failure to even consider the public interest.
Footnote: In the small world department, Mintz is a director of Brookfield Asset Management, the effective controlling shareholder of Western Forest Products. WFP was enriched by some $200 million by then forest minister Rich Coleman in 2007, when he released land near Victoria from tree farm licences. The provincial auditor general, in a damning report, said there was no justification for the gift, no effort to ensure benefits for the public and a failure to even consider the public interest.