B.C. HST talks began May 2009: documents

British Columbia's Liberal government started working on a Harmonized Sales Tax just three days after winning last May's election, federal Access to Information documents show.

The documents obtained by The Canadian Press show bureaucrats from the B.C. Finance Ministry contacted federal Department of Finance tax officials on May 15 with an information request regarding the Harmonized Sales Tax (HST).

B.C. Finance Minister Colin Hansen has said the Liberals didn't consider the HST until after the May 12 vote, but the documents show for the first time just how quickly the move toward the tax began.

The documents include a May 15 email from Glen Armstrong, the B.C. government's tax policy branch executive director, requesting information from Louise Levonian, the federal Department of Finance's assistant deputy minister tax policy branch.

Levonian responds to Armstrong's email on May 15 with a note: "Glen, please see attached information."

Hansen said Thursday he has not seen the federal documents, but suggested they were part of routine discussions that occur between federal and provincial bureaucrats.

Bureaucrats initiated contact

He said provincial bureaucrats were not under political orders to pursue HST talks with Ottawa.

"This request for information was not in any way requested by myself, any member of government or anybody representing anybody at the political level," Hansen said.

He said the timing of the HST requests three days after the B.C. election is not suspicious because federal and B.C. bureaucrats have been debating the HST for years.

Hansen said he was briefed by his ministry's officials days after the election, and the HST and the implications of Ontario reaching its own HST deal with Ottawa last March may have been part of those discussions.

Most of the contents of the emails are blanked out, along with most of the rest of the 817 pages Access to Information officials identified in connection with the request.

Officials expunged most of the documents, citing rules that allow governments to withhold information obtained in confidence and refuse to disclose federal-provincial consultations and deliberations.

The B.C. government announced on July 23 that it had reached an agreement with the federal government to harmonize B.C.'s seven-per cent provincial sales tax with the federal five-per cent Goods and Services Tax, creating a 12-per cent HST.

Hansen said last July the move to a single value-added tax will be good for business, cutting an estimated $2 billion in business costs.

Ultimately, he said it will result in higher wages for workers and lower prices for consumers as business passes on its tax savings to consumers.

The Opposition New Democrats have accused the Liberals of not telling B.C. voters during the campaign last spring they were considering implementing the HST.

$1.6-billion offer

Hansen consistently said the harmonized tax was not part of the government's agenda, until after the May election in which the Liberals were re-elected to their third consecutive mandate.

Hansen said B.C. decided to pursue the tax after Ontario announced last March it would implement a 13-per cent HST.

Also, an offer of $1.6 billion from Ottawa to the province helped convince B.C.'s cash-strapped Liberals to take the deal, said Hansen.

The B.C. government tabled a record deficit budget of $2.8 billion last September, citing plummeting government tax and resource revenues.

The B.C. HST, which is set to take effect on July 1, has touched off an intense political and grassroots debate.

The Opposition New Democrats are focusing all their attention on criticizing the tax. They're targeting seven Liberals to vote with them in the legislature to dump the proposed law.

And before the Liberals have even passed the bill, former Social Credit premier Bill Vander Zalm has mounted a campaign to sign up 10 per cent of voters registered in every riding in the province to repeal the HST law.