By Richard Chu
BC’s harmonized sales tax claimed its highest profile casualty last week with the resignation of Premier Gordon Campbell.
The decision’s timing surprised some, but perceptions were mixed about whether his resignation will improve B.C.’s business climate.
Said Andrey Pavlov, an associate finance professor at Simon Fraser University, “I am quite concerned that this is going to send the wrong impression to the investment community. What worries me here is the link with the HST. Everyone is going to link Gordon Campbell’s resignation with the HST, and this is a bad link.”
He, like many economists and financial analysts, argues that the HST will make B.C. more competitive by reducing for many sectors roughly $2 billion in PST-related taxes and expenses and boost investment in the province. Uncertainty over the HST, which Pavlov feels will be heightened with Campbell’s resignation, will send potential investors to other provinces.
“People who are looking to locate in Canada are going to look more favourably at Ontario now,” which was a concern Finance Minister Colin Hansen had expressed when he spoke to BIV last winter (see “Newsmaker of the Year: B.C.’s HST” – issue 1052, December 22-28, 2009).
Ian Tostenson, president of the BC Restaurant and Foodservices Association, said he was “sad it came to this. The fact is, we became so splintered that I suppose there was no way out as a leader to keep trying to sell something that the public wasn’t buying. I have huge respect that he’s taken one for the team, but I think it was necessary.”
According to Jock Finlayson, executive vice-president of policy for the Business Council of BC, the move is unlikely to add uncertainty to B.C.’s business climate beyond what has already been created by next September’s HST referendum and any residual concern over the economy.
“There is a real uncertainty over the future of the HST. How that will be affected by Campbell’s departure, I think, is too early to say, but the Liberals are going to have a leadership race, and the issue will undoubtedly emerge and be debated, and the new leader may take a new position on it.”
“But apart from that, I don’t see any reason the overall direction of the B.C. Liberal government on what I would call mainstream economic and business policy issues is likely to change very much.”
Meanwhile, the Vancouver Board of Trade’s chief economist said the premier’s resignation was not due entirely to the backlash over the HST, although he added that more people will likely be able to speak out about the ramifications if the HST is rescinded.
“A lot of people who want to talk about it haven’t really said their piece yet,” said Bernie Mangan, “and now they will because they’ll take the opportunity to talk about it in less flamboyant and more realistic tones.”
Added Keith Sashaw, president of the Vancouver Regional Construction Association, “We understand the circumstances in which the decision was made, but we certainly look back on Gordon Campbell’s term as one of growth and general beneficial impacts for B.C. But I’ll be interested to see what happens next.”