You know, at one time the News media actually (I know I am showing my age) had a certain amount of factual information and balance in their reporting.

As the coverage of the release of the report the BC government asked an the independent panel to prepare to provide BC voters with the information needed to make a wise decision when casting their vote – yea or nay – on the HST referendum demonstrates neither the broadcast nor print media can be trusted to provide factual and balanced coverage of important issues.

Watching the coverage or reading the papers left one thinking the report had salvaged the BC Liberals and the HST.

Since this was not what I had expected from an independent panel I went to the internet to read the report and found that nothing could have been further from the reality of the report than the media coverage.

Indeed, the coverage provided by the media was so misleading the coverage, with its total disregard for reality, accuracy or the consequences of the coverage, borders on malfeasance.

The report was a thoughtful examination of the HST setting out the facts and realities of the HST and placing the HST in context vis-à-vis the budget realities of the BC government – a must read for those who will be voting in the HST referendum.

Indeed the report does such a fine job of setting out the budget realities faced by the province and government of BC, the report needs to form part of budget deliberations and discussions to ensure politicians and public have a solid understanding of the budget [revenues and spending] realities of the provinces finances.

You can read the report HST or PST/GST? – IT’S YOUR DECISION in its entirety or the excerpts (italicized) below which includes over 90% of the report itself, reformatted to this format.

We’ll admit — It’s been a struggle. Some of the facts about the HST and PST/GST are crystal clear. Other facts will take time to emerge. Tax policy is complex and it’s not always easy to arrive at black and white conclusions.

The process of preparing this report has shown us much of the debate over the HST and PST/GST remains filled with factually incorrect information. We believe that better information, including the good and the bad about each tax system, is critical for there to be a successful referendum – no matter the result.

Revenue from the sales tax equals the total income taxes paid by individuals. If B.C. eliminated the sales tax — whether it’s the HST or PST/GST — there would be a $5-billion to $6-billion hole in the $41-billion budget. To compensate the government would need to increase the deficit, raise other revenue or cut spending on services. Or do a combination of all three.

Spending on health care [currently 42% of the budget] in B.C. is growing more than twice as fast as the government’s revenue growth.

If governments are to adequately fund public services and avoid cutbacks, tax hikes or deficits that add to provincial debt [interest on debt is 6% of budget expenditures; increasing debt and/or increasing interest rates means more of the budget must be used to pay interest, decreasing the monies available to provide services], they must have reliable and robust sources of revenue.

Under the PST, much of the service economy went untaxed. Under the HST, most services are taxed. That means a broader tax base and a more stable source of revenue for government. One thing is clear— sales taxes are essential to the B.C. government’s revenue base.

“As a consumption tax the HST is efficient. There are no loopholes, exemptions for special interest groups or deductions.” Paul Mockler, A & A Trading Ltd.

British Columbian families pay an average of $350 more every year on routine expenditures under the HST. The more you spend, the more HST you, pay. The more you earn, the more you’re likely to spend. If your family is one of the 15 per cent of B.C. families that report income of less than $10,000 a year, you’re actually better off under the HST. All B.C. taxpayers’ HST costs are partially offset through income tax relief. 17% of your spending has an extra seven per cent sales tax; 29% of your spending is subject to the same total sales taxes as before, it has not gone up or down; 54% of your spending is not taxable under the HST or the PST/GST – nothing has changed.

To make a product or service, businesses pay for items like power, heat, rent and computers. Under the PST, businesses paid the seven per cent sales tax on those purchases. While you never saw it on your bill most of that PST was added onto the final price you paid at the cash register. Call it the invisible PST paid by you, the consumer.

Under the HST system that’s changed. Most businesses receive a full rebate on sales tax paid on items they buy to make a product or service. That means they no longer add the invisible PST to the final price they charge you. Businesses can pass on their HST rebates to you in the form of lower prices or use their savings to invest in new equipment and productivity.

“For B.C.’s businesses to remain competitive, a value-added sales tax, like the HST, is a necessity.” Institute of Chartered Accountants

Virtually all economic analysis finds the HST increases economic growth, productivity, wages and the quality of jobs. A move back to the PST/GST will likely have a negative impact on business and investor confidence because of uncertainty over tax policy. The panel’s commissioned analysis concludes the economy will get a bigger boost under the HST than it would under PST/GST. Under the HST, the size of the economy will be $2.5 billion larger in 2020 than it would have been with the PST/GST. That’s about a 1.1 per cent higher growth. Small and large businesses save at least $150 million in administrative costs because they now comply with one tax, not two.

“A reality that has seldom been mentioned in the HST debate is that the provincial government actually has relatively few policy levers available to attract investment, foster the growth of high-paying private sector jobs, and enhance B.C.’s competitiveness. The design of the consumption tax regime is one area where the province has the capacity to shape the economic environment in a positive way.” Business Council of British Columbia

The HST puts exporters on the same footing with the more than 140 other countries that have gone to value added sales taxes, such as the HST, to make their exports competitive in the global marketplace.

For the important small business sector the HST is a benefit as the HST removes the PST from the cost of production. That makes it cheaper to produce goods and services, helping overall sales and exports. The HST also makes bookkeeping simpler and cheaper for small business. Compliance with only one sales tax (HST) vs. two (PST and GST) is particularly important for small firms, which often don’t have the same administrative resources as larger companies.

Our consensus is the HST will be a net benefit to the economy. But don’t expect dramatic results overnight – it’s a tax that offers incremental benefits over time by: Making most businesses more competitive; Reducing administrative costs to businesses; Reducing the cost of producing goods and services; Creating more jobs.

Going back.

Going back to the PST will take 18-24months. The time is needed for rewriting federal-provincial tax laws and regulations, hiring back 300 tax collectors, rebuilding a provincial PST office and helping businesses readjust their accounting systems.

The first year of going back to the PST/ GST will result in the province losing the

$820 million in the first year, increasing to $893 million in the second year and would widen each year. Factoring in the saving the provincial budget would see a net revenue loss of $531 million in the first year and $645 million in the second. That trend would continue each year, meaning other revenues would need to be found or public services cut to avoid increasing future deficits.

Going back will be expensive. The province will probably have to repay Ottawa the $1.6 billion it received to transition to the HST. If the government borrowed $1.6 billion to repay Ottawa, it would cost $85 million a year in interest based on today’s interest rates. {Assuming that repealing the HST and the need to borrow $1.6 billion does not result in a change to BC’s credit rating and raise the interest rate BC can borrow at}

Note: one point I feel the report was not strong enough on is the negative effect repealing the HST will have on the province’s cost to borrow money. Lenders are repaid out of government revenues raised through taxes. I feel that a refusal to pay higher taxes while at the same time demanding more and more services – and thus rapid increases in debt, is going to have a significant effect on the cost to borrow money and the negative consequences flowing from increasing costs of debt servicing. Indeed, under those circumstances the province could begin to have trouble borrowing the money it needs as lenders become cautious about BC’s debt escalation.

And while it may not seem large compared to other costs the government will spend $35 million each year to run the PST office.