I’m voting ‘No’ in the Referendum so that we can keep the HST in BC.
That will not shock anybody. I’ve been a vocal proponent for the HST since its introduction last year.
So vocal, in fact, that I was asked to co-chair the Smart Tax Alliance, which is the official ‘No’ side for the referendum. Acting as a co-chair has meant dozens & dozens of media interviews, more than a few radio debates and appearing in a television commercial.
I was also quoted in the HST Referendum Voters Guide that was sent to every British Columbia household by the Government.
As a result, I’ve had hundreds of people contact me over the past few months… lots of people letting me know they agree with me, lots of people saying they don’t, and plenty of undecided people with questions about what they had heard me say in the media. All in all, it’s been an interesting experience.
Now that we’re at the very end of the road on this issue, with the mail-in vote deadline of August 5th, 2011, I thought I’d answer the most common questions I have been asked about the HST and my involvement.
The most common questions that I’ve been asked are:
- 1. Why was the PST+GST system so bad for Provident?
3. How has the HST helped improve Provident’s customer service (like I say in the commercial)?
4. How has the HST allowed Provident to create new jobs?
5. Has Provident lowered prices as a result of the HST savings?
Why was the PST + GST system so bad for Provident?
Under the old PST system, the government rules about how and when to apply the PST to alarm systems were incredibly complicated. In fact, they were so complicated that the government had a 15 page bulletin that attempted to explain how PST was to be applied to alarm system installation.
Being complicated isn’t a good thing, but it would be manageable. The real problem with the PST rules was that they were often contradictory… leaving huge decisions, with major financial implications, open to a wide range of opinion & application.
Over the course of the past 9 years, we had three PST audits. During each of those audits, the Auditors themselves disagreed with what the PST rules meant and how they were to be applied.
As a result, we went through lengthy appeals processes in each case in an effort to be treated fairly. Our last appeal ended up taking 5 1/2 years to work its way through the process. The net result was that we ended up spending the equivalent cost of having a full-time position in our accounting department that did nothing but work on government tax compliance issues… every single installation had to be reviewed to confirm what taxes got applied to which parts and in what circumstances labour would require PST (because even though PST was not supposed to be on labour, if labour was involved in installing a product that it was determined to be “PST-able” then it got taxed as well).
The other major costs involved in this were the fees we incurred with our external accountants to try and get clarity about what the PST rules were.
Beyond the hard cost, the PST confusion created a significant distraction in our company. We were forced to dedicate time, labour and money to fighting through the government bureaucracy in an effort to just get a straight answer as to how the PST should be applied.
By contrast, when the HST was implemented, we experienced an almost overnight change. There are far fewer exceptions and exemptions with the HST and we were able to take a process that used to take many hours each week to a process that now takes a few minutes each quarter.
I’ve since heard from many other small business owners who have had the same experience. Unfortunately, some are still having the same fight even though the PST has been gone for a year now.
Introduction
Why did I (and Provident) go public to try and drum up support for a tax? How did I get involved with the Smart Tax Alliance?
Last year, I got inspired to do something after listening to Bill Vanderzalm, all over the media, telling people that the HST was only good for big businesses and that everyone else would suffer. In particular, he talked a lot about how the HST hurt small business.
That concerned me a lot because, as a small business owner, I had seen first hand how unfair and expensive the PST system was. I had seen how the PST added significant hidden costs within our business and wasted valuable resources that our clients received no value from. I knew that going back to the PST/GST system would be a costly nightmare that would hurt our company, our employees and our customers. I had seen how the HST served to eliminate waste and allow us to focus more of our time, money and resources on our clients.
It was clear that the Government had done a terrible job implementing the HST, and Mr. Vanderzalm was taking full advantage of that. I thought what was missing were real stories, from real people, about how the HST was helping, not hurting, small business.
The only person talking about the HST was Mr. Vanderzalm and I knew that what he was saying about small business was not true.
I knew from speaking with many of my friends who owned their own businesses, that my experience was not unique.
I set up a website, www.SupportHST.ca … the idea was to create a page where small business owners could upload a quick video to tell their own story of how the HST had helped them. I filmed my own first…
A few friends of mine who run businesses in other industries filmed their own clips as well… Ken Sim from Nurse Next Door – a home healthcare company, Dwayne Stewart of Pacific Rim Services – a general contractor, Dave Notte from Wolfgang Commercial Painters and Chris Mobius from Garibaldi Glass Industries – a glass manufacturer, were amongst the first. Andy Latchford, COO of Cactus Club Restaurants submitted his video and was one of the first restauranteurs to go public saying that the HST was a good thing for our Province.
Although the original intent of the site was to highlight the stories of small business owners, I was contacted by other people that had also felt offended by Mr. VanderZalm’s HST rants and wanted their voices heard.
Chrystal Ocean, a low-income senior living on Vancouver Island, submitted a video sharing her experience of how the HST has helped put more money in her pocket. Click below to watch her story:
Similarly, Don Wilson, a retiree who has never owned a business, submitted a video explaining why he supports the HST as a consumer.
Shortly after launching the site, we had 21 videos posted. The site got a little bit of media attention, and myself, Dwayne Stewart and Ken Sim were guests on the Bill Good Show a couple of times to talk about what we were doing. 
In February or March, I was contacted by the Smart Tax Alliance who let me know that they were trying to get the same message across as I was, and had already brought about 40 major business & trade groups together (such as the Vancouver Board of Trade, Tourism BC, etc.) who represented more than 1 million BC employees/members.
It seemed to make a lot of sense to get involved with the Smart Tax Alliance and pool our efforts. I was asked to become a Co-Chair and act as one of a few media spokespeople.
How has the HST improved Provident’s customer service (like I say in the commercial)?
Once the HST came into effect, we were able to take the money we had been spending on PST administration and, instead, spend it on our customer service team. Immediately, we were able to add another full-time customer service position without any additional cost to the company.
As a small business that relies exclusively on word of mouth referrals, providing a better client experience has led to more referrals and more business. We’ve reduced our on-hold times and have been able to tackle pro-active customer service projects that we had not been able to get to in the past.
Under the old PST system, a portion of all of our clients fees that they were paying for security services had to cover our tax compliance costs. With the elimination of the need to administer the PST (which was by far the most complicated and time-consuming administration task) our clients are now getting more value for the same fees.
The HST has allowed us to focus more effort on customer service without increasing our costs or prices.
How has the HST allowed Provident to create new jobs?
Under the PST system, any PST we paid for a computer, printer, box of paper, vehicle or tool was a cost that got worked into our pricing as overhead. Since the HST was implemented, we now get all of that money back (as an Input Tax Credit against what we have charged).
Our most important service is our ability to provide an immediate response to client alarms. So, we decided that the best thing to do with those savings was to purchase a new vehicle (which was also cheaper for us with the HST) and add a full-time driver to join our alarm response team.
The impact of adding that one position on the road, as well as the additional person on our customer service team, (both of which added no new additional ‘cost’ to us) resulted in quicker response times and happier clients. We’ve seen an increase in the number of referrals we get each month and added a second new vehicle (and full-time driver) to accommodate the new business.
We are currently recruiting for two new sales people to join our team to help keep up with demand.
Without question, the HST helped put us in a position where we could grow so quickly. The old PST system added a significant cost to our business that did not offer value to us, our clients or even the government. By contrast, we are now growing much faster (resulting in more tax revenue for the government) and we are able to focus much more on service delivery (resulting in much better value for our customers).
With the pending rate reductions on the HST (to 10% by 2014), the impact to consumers has been reduced and I firmly believe that we (business, government and consumers) are all better off with the HST rather than going back to the PST.
The impact of reverting to us would be that we would be forced to choose to either 1) reduce service levels, or 2) raise our prices in order to maintain the same cost structure.
The PST hurt our business and wasted our clients’ money.
Has Provident lowered prices as a result of the HST savings?
With a few exceptions, we have not reduced our prices since HST implementation. Based on our understanding of our clients & our service delivery model, we decided that the best use of the savings we realized as a result of the HST was by investing in new trucks and new jobs. Our business is all about speed, efficiency and service… we elected to spend the money on things that would improve all three.
That was a business decision and one that our clients will judge us on. If a price break is more important, they will tell us &/or simply cancel their service. If we do not keep our clients happy, we will not be in business.
The specifics of how we applied the savings is all about our particular situation. If I was leading a different business, in a different market, where price was the primary differentiator, I would likely make a different choice.
The HST helps BC businesses save money (and waste far less of it). As a result, those businesses are free to choose where those savings are best spent. The decision to add jobs, raise wages, cut prices or anything else with the money is theirs to make.
Ultimately though, it is the consumers who will make the final call as to whether or not a company has made the right choice. Business is far too competitive. If consumers feel they get better value for a better price somewhere else, they will go there. They will vote with their dollars. Businesses who choose poorly will be left behind… quickly.
What’s the deal with Bill VanderZalm?
In all honesty, this is one of the questions that I get asked most often. The truth is that I have no idea.
Listening to him speak, I am often amazed that anyone – anywhere – could (or could have ever) taken him seriously. He’s certainly not one to let the facts get in the way of a good story.
But to be fair to Mr. VanderZalm, Chris Delaney & Bill Tieleman (the other 2/3 of FightHST) have been equally outrageous in their statements, accusations and pronouncements.
Some of the best critiques of FightHST have been made by Chris Thompson, a UBC Economics grad and current UBC Law student who created two great videos that sum up the absurdity of FightHST.
Here’s the first, titled ‘FightFightHST: A Letter to Bill VanderZalm…’ focused mostly on dispelling some of the misrepresentations made by Mr. VanderZalm…
His follow-up video, FightFightHST 2: Fighting the Man, who was “The Man”, who is “Fighting the Man”, included all three FightHST leaders…
The reality is that Mr. VanderZalm accomplished something incredible. He spearheaded the first successful petition under the Recall & Initiative Act. He and his group got more than a half million people to sign the petition and force the referendum.
If it hadn’t been for that, there is no way that we would have seen the Government offer a two point reduction in the HST (to 10% by 2014) which, when implemented, will tie British Columbia with Saskatchewan as having the lowest sales tax in Canada (Alberta is excluded because they’ve got oil instead of a sales tax).
The fact that Mr. VanderZalm has not already declared victory and dropped the FightHST argument suggests to me that this is much more of a political & personal battle for them than an honest debate about an economic policy.
The fact that the BC NDP have joined in the fray and are also pushing for a ‘Yes’ vote alongside Mr. VanderZalm, irrespective of what it costs our Province, is also telling.
The BC NDP and Mr. VanderZalm certainly make strange bed-fellows. More interesting, however, is the fact that politically, nobody else appears to agree with them.
It is not just the BC Liberals who support the HST. The BC Conservatives want to keep it. Jane Sterk, the Leader of the BC Green Party has indicated she will vote ‘No’. British Columbia’s two Independent MLA’s, former NDP’er Bob Simpson and Vicki Huntington voted in favour of the recent amendments to the HST that will see it drop to 10% by 2014. Even one of the BC NDP’s long standing Economists has come out in support of the HST.
The NDP governments in Nova Scotia and Ontario support the HST. Even Jim Stanford, the Chief Economist of the Canadian Auto Workers, Canada’s largest trade union, has warned members against getting involved in anti-HST efforts.
In Mr. Stanford’s 2009 letter to CAW members, he commented on the political opposition to the HST:
“Political opposition to the HST does not reflect a well considered call for a fairer tax system. It’s more about electoral gamesmanship by opposition parties eager to damage the current government. When the anti-HST coalition tries to tap into knee-jerk anti-tax sentiments to win more votes, it also encourages a regressive, potentially dangerous attitude to government and the public services those taxes support. We’ll pay dearly for that kind of attitude in coming years.”
Over the past year, we have seen support for the HST rise with every poll. From an original approval rating of only 12%, support for the HST has been steadily climbing. In every single poll conducted,support for the HST has increased while the number of people who want to go back to the old system has gone down. The latest polls, at the outset of the voting period, indicate its going to be a very close race.
As a small business owner who has seen how HST helps make us more competitive, eliminates government waste as well as helps us to create more jobs, I am frustrated by the FightHST misrepresentations that serve to push our entire province backwards for the perceived political gain of a few.
But it’s not just small business owners.
People like Chrystal Ocean need voters to understand how the HST has put her and the rest of British Columbia’s most vulnerable citizens ahead financially.
School Districts need voters to understand how the HST is capable of putting $500,000.00 back into their budget… allowing them to get more done, with less tax dollars.
Economists like Kevin Milligan and Tax Lawyers like David Robertson who have both spent their entire professional lives studying issues like the HST want voters to understand how the HST helps BC and that the lies told by FightHST have been discredited by virtually every single Economist in our Country.
The Certified General Accountants Association of BC wants voters to understand that the HST is a much fairer tax than the old PST system.
Krishna Pendakur, an SFU Economist, and self-proclaimed ‘lefty’ wants voters to understand ‘why the Left should love the HST’.
The trick isn’t to try and find credible experts who support the HST, it would be to find a single one that does not.
The bottom line for me is that this HST argument is a lot like having some sort of medical condition where you get an opportunity to hear from every doctor in the country who specializes in that condition and they ALL agree on both the cause and the cure.
You also ask your brother’s basement tenant what he thinks. He mentions that he once knew a guy, who saw a show on TV that clearly proved all doctors were idiots (and that they were also conspiring to destroy the world).
It’s a dilemma. Do you listen to the advice of the experts who have dedicated their professional lives to the study of the issue, and who unanimously agree on what will solve the problem, or the guy in the tinfoil hat?
What was it like being one of the public faces of the HST debate? How much hate mail did you receive?
One of the many lessons I learned is that there is no shortage of conspiracy theorists who are capable of weaving incredible stories together based on a loose collection of random thoughts, an occasional fact, opinions & outright lunacy. From my experience so far, this talent seems to be concentrated on a few people with a lot of time on their hands… and an internet connection.
To say that I’ve received some interesting emails would be a gross understatement.
One of my favorites accused me of somehow masterminding the Canada Post strike to coincide with the mail-in referendum. Another, that I was only trying to get the HST to stay, in order to increase crime levels, in order to benefit personally (those were, apparently, the only steps involved).
More than a few people took to their own blogs and created their own reasons to explain why I would be in favour of the HST. Here’s a quick excerpt from one such blog that gives a flavour of the content…
The reference to ‘what he’s read’ is to another blog that read through the press clippings on our own website, found an article from Profit Magazine where I am quoted explaining our PST fight, and a quote from Premier Gordon Campbell thanking us for providing great service during a security incident several years ago in his constituency office. Two and two were put together, and the “obvious” answer of thirty-seven was arrived at.
For what it was worth, I asked the writer to amend his blog post to at least tone down the libel a bit… He sent me back an email telling me to beat it (not using that exact phrasing), but at least added the words ‘in my own personal opinion’…
Sadly, Provident paid every single penny of our PST debt referenced in the Profit article (more on that below). We were ‘forgiven’ nothing. That PST incident was, however, my inspiration for getting involved in this whole HST argument to start with.
I was even accused of not being a real person. I decided to take it as a compliment that I had to respond to accusations of being a ‘paid actor’.
I’ve also learned how easily & quickly the politics of an argument like this overshadow the argument itself and keep people from considering any viewpoint other than the one they started with. Many people seem completely focused on wanting to ‘send a message to the BC Liberals‘ at any cost … and in most cases, without having any real idea of what that cost actually is (no, the $1.6B transfer payment will not be ‘forgiven’).
Trying to debate the specific merits of the HST with someone whose only answer to any argument is “The Liberals lied” is a pointless endeavour with no upside for anyone. Thankfully, I have had the opportunity to speak to enough other people, willing to have a real discussion, to not destroy my faith in humanity.
Our Operations Centre team at Provident (our team who answer all incoming telephone calls) have done a great job putting up with the increased volume of callers wanting to get in touch with me to tell me that I’m an idiot or, in quite a few cases, simply wanting to ask some thoughtful and reasonable questions about the HST.
With the exception of the people who called/emailed just to say I’m stupid, I called or emailed every person back. I offered my explanations about how the HST has benefitted our company, how it has created jobs and why the PST was such a complicated and expensive mess for us (and our customers).
My frustration (although tempered with some great entertainment value) with the wingnuts, was overshadowed by the vast majority of people who contacted me with good questions or to have a real discussion on the issue.