B.C.’s vote to kill the HST will “devastate” film and scare manufacturing companies into relocating to Ontario, according to local industry experts.
Elections BC released the HST referendum results: 54.73% of voters voted “Yes” to extinguish the HST after 11 a.m. on August 26.
Andrey Pavlov, an associate professor at Simon Fraser University’s Beedie School of Business, said that the loss of the tax will push manufacturers to Ontario or another province that has HST.
“Frankly speaking, I just can’t see why any manufacturing business would choose to move here or remain here,” he said. “We don’t have very much manufacturing to begin with; we’re going to have even less now.”
On top of additional taxes many businesses will pay under the reversion to the old PST/GST regime, Pavlov emphasized the costs businesses are going to face to switch their accounting systems.
“It’s terrible because you pay the cost of switching twice. You go to HST, you figure it out, it’s finally running smoothly, and now you have to pay, again, the cost of going back.”
Pavlov said while he’s very disappointed with today’s referendum result, he’s not surprised.
“The government did a terrible job explaining why the change was needed and what the change really meant,” he said. “And then there were political forces in our province that seized that opportunity and went against something that is really good for our province – and they did it for political gain.”
Peter Leitch, chairman of the Motion Picture Production Industry Association of BC and president of North Shore Studios and Mammoth Studios, told Business in Vancouver that the loss of the HST would be a negative tipping point for film, which is already up against a high Canadian dollar and jurisdictions with more favourable tax regimes such as Ontario. (See “Loss of HST could “devastate” BC Film” – Business in Vancouver, issue 1136, August 2-8.)
“Losing the 7% benefit that we get on goods and services that attract the HST is going to be devastating for our industry, and we could see a substantial loss of jobs as a result of being not competitive,” he said.
Leitch is also co-chairman of the Smart Tax Alliance, which promoted keeping the controversial tax.
“It’s going to be very challenging for us. I predicted from the beginning that if this didn’t pass that it would cost us jobs in this industry,” Leitch told BIV after the vote was announced.
Jenny Wagler
Twitter: JennyWagler_BIV