Subsidizing companies now so they might pay taxes later
Well, they finally come out of the woodwork–the businesses that support the harmonized sales tax (HST) being introduced to British Columbia. Apparently Dracula John Allan, president and CEO of the Council of Forest Industries, decided to step up and throw his cape into the ring:
Switching to a harmonized value-added tax is one of the best things the government could have done to help the ailing forest industry, John Allan, president and CEO of the Council of Forest Industries, told The Vancouver Sun editorial board last Friday.
With lumber prices lower than the cost of producing it, the forest industry is “burning cash,” Allan said. But with the softwood lumber agreement in place, the government’s hands are tied on how it can help.
So harmonizing the tax, which is allowed under the softwood lumber agreement because it applies to everyone, “is a huge huge deal for forestry,” Allan said.
Speaking of huge huge deals, it might be worth noting that the forestry industry has received over $1 billion this year in direct aid from the federal government, $420 to $440 million going to the British Columbian producers alone. The president of the Communications, Energy and Paperworkers Union of Canada is also asking for guarantees–not subsidies!–for the forestry industry.
People like John Allan can’t just come out and admit a quid pro quo, but all of the signs are there. An industry interested in improving “efficiency” is doing everything but that. Rather than simply stopping production, if they really are “burning money” as they are claiming, they want to continue running the Potemkin mill and approaching the government pleading poverty. The article points out that the BC government claims that the construction industry, which uses a lot of lumber, will be saving an incredible amount of money. However, with the HST burden shifted to the consumer, people will be far more reluctant to buy any of BC houses already over 50% higher than the Canadian average. So with the heavily subsidized lumber producers, we should be building a lot of houses that no one would want. I’m hoping there is some sort of surplus system designed to drive down housing prices, but isn’t that a little too close to price control?
Premier Gordon Campbell’s ideas of lateral-shift taxation are not helping anyone. If he was interested in really helping out BC’s forestry industry, he would simply drop corporate taxes. Good luck getting a sweetheart deal on debt relief and direct subsidies for that new first house for the average taxpayer in BC. (And I’m still waiting on my $100 cheque.)
It wasn’t too long ago that the forestry industry, among other industries, were protesting the carbon tax, which will rise to $30 a tonne by 2012. Now that the industries are going to enjoy a tax break, they suddenly like Campbell’s tax ideas. Amazing timing, isn’t it? Meanwhile, average folks will pay more tax from the HST and already pay more tax from the carbon tax. Bear in mind that the HST was such a brilliant idea that the Campbell government specifically swore it was not on their radar right until last May, right after the election.
Try to imagine that this as close as it gets to a conservative mindset in British Columbia. Businesses that are likely going to be dependent on government handouts will have no incentive to modernize or become more efficient and competitive, but they make the perfect puppet for when the government is actually raising taxes to make it seem like we’re paying them anyway.