Category Archives: Consider

The Fault Lies Not in Our Stars but in Ourselves

” What’s the matter with all of our elected officials? Obviously, health care is not your top priority. Taxing us to death seems to be at the top of your list.”

What is the matter with our elected officials Ms Whiteford? You and the majority of other citizens, along with reporters, pundits, the media and opposition politicians.

Where do you suggest the government get the funds to build more hospitals or pay more medical staff? Perhaps capture Rumplestiltskin, imprison him in the basement of the Legislature and have him spin straw into the tons of gold required to pay for the multi-billion dollar demands of yourself and others?

Billions of dollars in demands for new infrastructure and services that everybody demands and refuses to pay for – ” Taxing us to death…” Citizens behave as if the provincial government did have Rumplestiltskin in the Legislature basement generating an unending supply of gold from straw.

That may seem, may well be, a little snarky but – people demand to keep underutilized schools open, build new schools, smaller class sizes, more hospitals and hospital beds, more medical staff, more expensive medical treatments and drugs, they want to spend billions more to build and staff prisons to lock more people up for longer periods of time, they want……they want……they want……..

They want everything NOW and they want it for FREE – or at least they don’t want it to cost them any money or to raise their taxes.

You want more schools and hospital beds? Then that is what you should have been demanding the government spend its money on rather than spending billions on the two week blowout that was the Winter Olympics. The money being spent on replacing the stadium roof in Vancouver would pay for St. Paul’s hospital to be renovated.

We want it all without having to pay for it; the size of government debt bears witness that for years we have been consuming more government services that we were paying for – whipping out the credit card and running up a huge debt to pay for our lavish lifestyle; we don’t want to set priorities and make the tough choices; we behave like two year olds with no acknowledgment of reality, no economic sense or view for anything beyond the now, certainly no thought to the future.

And as happens in the real world our spendthrift ways are catching up to us. The cost of the services government provides are climbing – medical costs are increasing exponentially. Without an increase in revenue to offset these spiking costs we are going to be getting less services across the board – forget about more services.

Will we have a discussion about our priorities, about the costs of programs, about what we can afford and what we cannot, about what is – rather than what we believe or want to be, acknowledge we cannot have everything we want and discuss what we are willing to pay and what services the dollars we are willing to pay will purchase?

No, people will support the party that tells them what they want to hear – that there is no problem and to party on.

Then people will complain that the politicians lied to them. Ignoring the fact that lying to them is what voters reward politicians for doing.

Could the government be run in a more cost effective manner – yes;, could the money be spent more wisely – yes; could the future financial health of the province be much improved – yes. Will it? Well…..

Should anyone make the mistake of talking about acting in a fiscally responsible manner, of paying for what services we use rather than saddling our children and their children and their children with debt because we ‘put it on the provincial (or federal) credit card’, of setting priorities……

They will be sent home with their tails between their legs for not telling the people the lies they want to hear.

Pointing fingers at others, blaming others will not improve the financial reality of provincial (federal, municipal) finances. If people want to see the root cause – and where the solution lies – to our current (and increasing) political, social and economic woes they need only look in a mirror.

HST – the cost of repealing

I do not know if Mr. Vander Zalm is feeble minded or so focused on beating and/or beating up on the BC Liberals that he does not care what the consequences for the province and citizens of BC are. But at this point in time arguing the question of whether Vander Zalm is a lackwit or a scoundrel is as trivial and wasteful as arguing 2 months or closer to 18 months to discontinue the HST and bring back the PST + GST tax systems.

The referendum on the HST is June 24, 2011. This means that should British Columbians vote to repeal the HST the province will not receive the final $475 million payment for becoming a HST province that is due from the federal government on July 1, 2011.

Now, to Mr. Vander Zalm the loss of $475 million of revenue may be inconsequential or nothing for the taxpayers of BC to be concerned about. However I consider this first consequence of repealing the HST and the cuts that will have to be made to health care and education to offset this loss a significant and major consequence.

The next consequence, should Mr. Vander Zalm actually prove to have a magic wand that would enable the federal and provincial governments to end the single tax HST and bring back the dual taxes of the PST + GST in one or two months time, is the loss of the $300 million extra dollars the HST would put in provincial coffers this year and the addition of the $50 million cost of collecting and administering the PST (a cost that under the HST is currently borne by the federal government).

Meaning an additional $350 million will have to be cut out of health care and education. Or the entire $825 (475 + 350) million could be offset by closing down the provincial court and prison systems.

Now, Mr. Vander Zalm may not consider a loss of revenue that would require shutting down the provincial court and jail system to offset to be a significant enough consequence to be concerned about in repealing the HST – personally I do.

In all honesty (I know, a novel concept in a political fight) I do not expect the $350 million per year loss of revenue + increased cost to have an effect before next year’s (2012 – 2013) budget. The need to replace the single HST form with two new (old) GST and PST forms, to procure and distribute the forms to all businesses in the province and to hire the staff to collect and administer the PST (remember the federal government is responsible for collecting the HST and remitting to BC their portion) plus the need of businesses to reprogram their cash registers/computers, to change accounting systems back to two separate taxes, to get the new forms….. There was good reason that the HST took all those months to implement.

Whether Mr. Vander Zalm is simply clueless, hasn’t bothered to give this matter any thought or would rather befuddle and distract the voters by arguing 2 versus 18 months to get rid of the HST and reinstate the PST + GST rather than face the multi-billion dollar effect repealing the HST will have on BC is a matter the reader will have to judge for themselves.

Although BC, should the result of the referendum be a HST repeal, will not receive the final payment of $475 million and thus not be liable for repayment of that amount BC will be liable for repaying the $1.1 Billion already received (and spent) for becoming a HST province.

Despite Mr. Vander Zalm’s airy dismissal of this debt the fact is that these funds were paid to BC as part of the HST agreement and that in reneging on the HST agreement the federal government is due repayment in full. Forget claims of ‘negotiation’.

The federal government is not about to set an unwelcome precedent for provinces taking their (the feds) money and reneging on agreements. The federal government will want repayment in full and since they can get their money back by simply reducing federal transfer payments to BC by $1.1 Billion Mr. Vander Zalm’s spurious claims of ‘negotiating’ or not having to repay the full $1.1 Billion are just so much Politician’s BS. The Province of BC will have to cut the $1.1 Billion out of budget spending because the feds will get their money back and there is nothing the province can do to prevent that.

Repealing the HST will impose a major financial indirect cost on the province of BC in the form of an increase in borrowing costs. Potentially a rather significant cost given the budget deficits BC is running and the increasing debt levels of the province of BC.

Repeal of the HST is a taxpayers revolt, a rollback of the tax increase effected by the switch to the HST and the fact that the provincial portion of the HST applies to more items than under the PST.

How are those who lend to the province repaid? Out of tax revenues.

BC is running large billion dollar deficits and taxpayers are refusing even a modest $300 million dollar tax rise to pay for provincial spending. Indeed, at the same time taxpayers are refusing to pay this modest tax increase they are demanding more healthcare and education spending.

Factor in the budget and financial chaos and damage the immediate loss of $475 million, the $300 million yearly reduction of revenue, the $50 million dollar cost of administering the PST and the $1.1 Billion dollar repayment to the federal government……and from the view of those with funds to loan, loaning BC money involves increased risk.

The perception of increased risk means an increased cost of borrowing. That the HST referendum is being held will increase BC’s cost of borrowing. Should the HST be repealed, a further premium will be added to the cost for BC to borrow.

Part of that premium will result from the perception that the BC government can no longer be counted on keep their agreements. And what that perception will cost businesses in BC, the government of BC and ultimately the taxpayers of BC only time will tell.

As I said, whether Bill Vander Zalm is a lackwit or a scoundrel is a rather trivial consideration at this moment, considering the devastation Vandr Zalm will have inflicted on the government and citizens of BC should he succeed in repealing the HST – once the consequences of repealing the HST come home to roost.

While there may be an element of truth to accusations that Premier-designate Christy Clark and Finance Minister Colin Hansen are fear-mongering (fear-mongering being a favourite tool of politicians) I have no doubt that Clark and Hansen are themselves (as is any British Columbian who understands the consequences of a HST repeal) afraid of the consequences of an HST repeal. Especially as they are the people who will be faced with dealing with the financial mess a repeal will bring about.

One final comment on this matter – Mr. Vander Zalm’s partners in crime. It does not matter whether the NDP’s support of repealing the HST signifies an abysmal lack of any comprehension of financial realities or a desperation to win the next election at any cost, no matter how devastating to the province and taxpayers. Either possibility disqualifies the NDP (without major changes in candidates and leadership) from being entrusted with

“I am a taxpayer and I’m entitled …

The television news report on Royal Columbian Hospital using Tim Hortons for emergency patients had an on camera interview with a daughter who’s mother was one of the patients in Tim Hortons who stated “how awful that you’ve been a taxpayer all of your life … that your end days are with that kind of quality of care … there is no excuse for that, I think they should be ashamed.”

I have heard, I suspect we have all heard – perhaps have stated ourselves – variations on the ‘I’m a taxpayer! What am I paying taxes for? I have paid taxes all my life……….

I had just spoken to a class at UFV on affordable housing, homelessness, addiction, mental illness, poverty and related social issues stating that these were not problems but consequences of both the way politics is practiced and the way though is practiced. More accurately about what we ‘know’ or what is ‘known’ or ‘common knowledge’ and how if we applied thought to these matters we would find or realize reality is markedly different from what is ‘known’.

When I heard the ‘been a taxpayer all my life’ statement I found myself examining the implications, the entitlement, contained in that statement. While the statement has the appearance or semblance of truth, when one carefully examines, carefully considers the statement it becomes clear that all it has is the appearance of truth.

The underlying fiscal reality for those who have paid taxes all their life is that what they are entitled to is CPP. The chart of Canada’s national debt below shows clearly that only those who retired prior to 1944 can make claims upon the federal government beyond CPP.

Year                                       Federal Debt

Prior to WW II                  $0

1944                                    $ 8,000,000,000

1961-62                             $ 14,825,000,000

1970-71                            $ 20,293,000,000

1980-81                              $ 91,948,000,000

1990-91                             $377,656,000,000

1996-97                            $562,881,000,000

2001-02                           $511,946,000,000

2007-08                          $457,637,000,000

2008-09                          $463,710,000,000

2009-10                          $519,100, 000,000

2010-11                           $522,337, 000,000 (projected)

2011-12                           $535,237, 000,000 (projected)

2012-13                          $542,537, 000,000 (projected)

If you purchase something for $1,500 and you pay out $1500 it is yours as you have paid out the full price of your purchase and are entitled to benefit from your purchase.

If you buy the something for $1500 and only pay $1200 you still owe $300 that must be paid and until you pay the final $300 you are not entitled to your purchase.

Beginning in 1944 Canadian taxpayers have been paying only a portion of the price of their ‘purchases’ of federal government services, borrowing to cover the remaining cost of the federal services ‘purchased’, putting the balance on a federal credit card- a balance that remains to be paid, a balance that continues to grow.

So, while taxpayers have paid taxes all their lives they have failed to pay sufficient taxes to cover the cost of the federal government . Taxpayers have avoided paying the full tab by running deficits, adding the outstanding unpaid yearly balances to the federal debt.

Every Canadian man, woman or child has/owes their portion of the federal debt, the debt of the province they reside in and the debt of the municipality they live in.

So while Canadians may be entitled to the CPP they paid into, the only ones entitled to anything else from the federal, provincial or municipal governments are those who loaned money to these governmental bodies and are entitled to repayment of principal plus interest.

Receiving medical care in Tim Hortons is a consequence of the decisions taxpayers have made (spending on the Winter Olympic venues rather than hospitals), together with years of choosing not to pay the full cost of all the services they were receiving from government.

If Canadians don’t want to be receiving medical care in Tim Hortons or hospital hallways they need to make better choices, to be willing to make hard decisions, face fiscal realities, understand we cannot have everything we want ‘right now’ and be willing to pay the full cost of the services etc we want (receive) from federal, provincial and municipal governments.

If Canadians don’t change our behaviours, choices and decision making, the days when you got medical services in the Tim Hortons at Royal Columbian are going to be the ‘good old days’ of public health care.