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For starters, and just for the record, here are Rafe’s three axioms of politics.

I.      You make a serious mistake in assuming that people in charge know what the hell they’re doing.

II.    You don’t have to be a 10 in politics, you can be a 3 if everyone else is a 2

III.   Never deliberately create an unpopular issue that will still be there on the next election day

Let me get ahead of myself with an illustration of the operation of Axiom III from when I was in government.

The Bill Bennett government, of which I was a member, came to power on December 22, 1975. The Barrett government that we had replaced had created the Insurance Corporation of BC and in a year and a half, with a monopoly on car insurance, had managed to lose $186 million. The provincial cupboard was bare.

In March of 1976 we brought out our first budget; we needed money and the Finance Minister, the late Evan Wolfe, proposed we raise the “sin taxes” starting with booze, Evan told us we would have to raise the price on Rye, Scotch, Vodka, and Beer …- whereupon the Premier got one of those dark scowls for which he was famous and said “No! Don’t raise the price of the workingman’s beer! Do you want everyone having a beer during the election cursing us every time he/she has a beer in the pub with their mates?”

The price of beer stayed the same, For while this was lousy logic it was damned good politics.

I needn’t deal, I’m sure you will agree, with the application of Axioms I & II to Gordon (Pinocchio) Campbell but Axiom III very much comes into play.

There are three main aspects, leaving aside Pinocchio’s utter lack of credibility.

1.   Fish farms. Campbell has, it almost seems deliberately, built this issue up from the beginning and while it didn’t form much of a part of most voters’ political consciousness, in the last election it’s there well and truly now and undoubtedly will be there in May 2013.

2.   Private power is becoming and will in fact be a huge issue by the next election time. This fall with The Common Sense Canadian (www.thecanadian.org) Damien Gillis and I will be visiting 30 communities raising awareness of the incredible damage this horrible policy is doing.

3.   The HST is a wonderful example of Axiom III at work; it will be a daily reminder from here until Election Day and will be a great issue for the opposition.

The HST started with a barefaced lie to the people having them believe that in May 2009 this tax wasn’t even on the Liberals’ “radar” screen yet six weeks later it was policy.

Issues, like mining stocks, need a story for them to sell. Promoters of penny stocks know this well having learned that the last thing you need to sell is the technical aspects of your product – what you need is a “story” that attracts support.

What was the Campbell’s story re HST?

Why, more taxes are good for you, folks. Moreover, you better off people will hardly notice it and who, besides the NDP, cares for the poor anyway? And here is the best part, the business community loves it and says that they will save millions on bookkeeping which they’ll pass on down to you. John Kenneth Galbraith aptly, if inelegantly, described this “trickle down” theory thusly: “If you feed the horse enough oats, some will pass through to the road for the sparrows.”

Not only is the HST proposition preposterous, its only supporters are those who would support Campbell no matter what he does.

Axioms I, II, III are immutable though I suppose you might get away with violating either or both I & II – but to violate III is fatal.

This government violates all three of Mair’s Axioms and all that remains to be done is calculate the carnage before we throw the bastards out.

2 Responses to “My three axioms of politics and the HST”

  1. Norm Farrell says:

    Perhaps Rafe can explain the caucus dynamics that so far have prevented an open revolt. Are Liberal backbenchers so nervous of the leader’s ability to punish or are they quieted by his promise to leave before the next election?

  2. Eagleone says:

    As for the HST the more I think about it the more insidious it appears in its implementation.

    Some will argue that it is a consumer tax, and that we should consume less, and therefore this is a good tax to generate government revenue. That is an argument of sophistry that irritates me.

    The facts are that the PST was also a consumer tax on consumption, so no real change there.

    The real change is the tax on `services` that was not applicable with PST… as well as the other smaller things like children clothing, and classifications of food items ect… but the real change is the taxation of `services`, and the input credit classifications.

    It is critical that we need to more narrowly identify what is a `service` if we are to understand what is the economic meaning behind the HST.

    A `service` it can legitimately be argued is in fact the component of Canadian labor involved in the gross income. The component of labor is not an input credit under HST law… whereas under the PST the services that were mainly composed of labor were not subject to the tax to begin with.

    So the implication of this means as I understand what I am seeing is that we have effectively added a 7% flat tax to the cost of labor in BC to all businesses that is not an input credit for anyone, and therefore is an effective 7% provincial flat tax on incomes disguised as a consumption tax, but ultimately rendered payable on value created by having an employee.

    It is sophistry to then be calling it a consumer tax.

    The economic effect of this new HST 7% flat tax on BC working incomes is that it takes that new 7% tax from the gross income of a BC based service industry. Since wages can not go down to account for this, the company then has to take the new 7% flat tax on their gross income out of the profit gap that exists between existing costs of their services and the value of those services in which they can make a profit/loss.

    A flat tax of 7% disproportionately effects the lower income workers and sectors of the economy, as in a progressive tax policy they would not be taxed if they were below the poverty line… and under HST that poverty line is irrelevant. A single mom on minimum wage ultimately has her labor taxed at the same 7% than an engineer for an engineering firm will be costed to the business bottom line.

    In short it will cost 7% more to employ a BC resident, then it would before with the PST. Yet on the other hand it will cost 7% less to buy a foreign manufactured product that can automate or create efficiencies to replace a British Columbian working individual, where as the imported consumer good has in input credit to retrieve any costs in acquiring it for the business, and an employee or human labor does not get the same input credit.

    So the economic step back the economists warned about in the private backroom communications that the political class was having I believe recognized that although HST benefits importers of foreign made products, and a manufacturing base that is highly automated with flow through products… the new HST will also have negative implications for the cost and value of employing local workers in British Columbia and in particular would be devastating to highly labor intensive low margin industries that were previously exempt from what is essentially then an employee flat tax that hits the employers gross income.

    The implication for this is that globalization wins… particularly the use of off shore manufacturing with labor intensive production… and the people of BC loss (to places like Alberta) when it comes to economic competitiveness in areas that require a high degree of labor skills (we are now at a 7% disadvantage in the knowledge economy). Gordon Campbell obviously is an eager listener when he attends the top secret private Bilderburg meetings.

    It is inevitable that employment in BC will be handicapped by this new 7% tax on BC employment, thereby lowering our overall GDP gains by a factor larger than the benefits to manufacturing gains over BC small business and employee intensive sector losses.

    I think there are a number of real tragedies here.

    #1) The small business sectors that rely on affordable labor were never consulted on this 7% flat tax to their employee costs… had they had a choice I’m sure small business would have given up that value gap to a raise in the minimum wage… rather than a subsidy to globalization.

    #2) The BC liberals have created a new 7% disadvantage to BC labor intensive knowledged based opportunities as opposed to our neighbors in Alberta. The area of future economic growth has been cut off at the knees with this new ‘service’ tax. BC liberal talk of a knowledge based economy is proven to be a lie and a contradiction to their taxation policy, so when they talk about building Vancouver as a financial hub, or tech economy… always remember they created the HST flat tax on labor that is a disincentive to realizing that kind of economic growth.

    #3) The BC liberals have created a further subsidy to globalization that benefits from cheep off shore labor for multinational manufacturing firms that avoid our labor, and environmental, and apparently our democratic standards… but at the end of the day gets the input credits a BC labor intensive operation does not receive.

    #4) The BC liberals have not done their homework on the implications of this tax, and communicated those implications honestly with all stakeholders involved prior to making any decisions. They made political decisions based on game theory alone with their own equations factoring predominantly.

    #5) The BC liberals have systematically lied to the BC voters in an election about a core issue in order to win an election based on a known fraud to achieve the ends of political power.

    #6) The BC liberals have lied about their knowledge of their lie to the voters of BC since the election and the implementation of a tax they promised they would not implement only a few weeks earlier when they were accountable to an election. They have shown complete contempt for not only the working class in the province, as well as their economic well being and political rights, but the entire system in the process.

    #7) The BC liberals have created a new standard of conduct that delinks an ‘informed voter’ from the ‘democratic process’ thereby enabling law-less politics in the future… as enabled by back room deal makers out of the public light working for a foreign agenda that tarnishes not only the rule of law, but more importantly the public faith in the democratic system.

    #8) The BC liberals have taken $1.6 Billion in bribe money to implement a tax that violated the sovereign rights to taxation policy of the province of BC… and the BC liberals did it without following the proper political process of a full legislative debate on all relevant issues in the new taxation powers transfer.

    #9) The BC liberals have used multinational business as a proxy to threaten the democratic process in BC through both their Forestry CEO threat letter to the voters at election time, as well as their attempt at a law suit to shut down the HST referendum process.

    #10) The provincial ndp have sold out their right to represent labor in this province (other than the labor of big government bureaucracy) through their underhanded support of the BC liberals HST policy by not proactively taking on this issue with clear alternatives and a road map to correct the most egregious areas in this new tax that hits labor at its lowest common denominator.

    Obviously its a time for new politics in BC and the old dinosaurs that will always sell us out from the extremes are nearing the end of their relevance to most working class families in this province. I think recall is a start, and the development of new political alternatives is inevitable.

    Time Will Tell

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