Opinion: David Eby should spike the PST expansion to make B.C. more competitive during trade war

Starting Oct. 1, the PST will be extended to services including accounting, bookkeeping, security, commercial real estate, and parts of the architectural, engineering, and geoscience sectors. This tax hike was questionable policy when it was announced. The trade war makes it indefensible today, writes Gavin Dew. Photo by motimeiri /Getty Images

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Donald Trump is trying to make Canadian businesses less competitive.

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David Eby shouldn’t help him.

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The breakdown in Canada-U.S. trade relations is bad news for workers, businesses and communities on both sides of the border. Canada should keep fighting for the best possible access to the American market.

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But we also need to recognize something fundamental: we cannot control what Washington does. We can control what we do here at home.

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As Washington makes it harder for B.C. businesses to sell into our largest export market, Victoria is preparing to make it more expensive to do business at home.

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The NDP expects its PST expansion on professional services to bring in $1.36 billion over the next three years, topping half a billion dollars annually once fully implemented.

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Starting Oct. 1, the PST will be extended to services including accounting, bookkeeping, security, commercial real estate, and parts of the architectural, engineering, and geoscience sectors.

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These are essential services businesses rely on to build projects, manage their finances, attract investment, grow, and stay competitive.

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A forestry company facing U.S. tariffs may need accountants and engineers to adapt. A mining company looking to attract investment needs engineers and geoscientists. A manufacturer trying to break into new markets relies on professional expertise. A retailer dealing with rising crime and vandalism needs security services.

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Unlike the GST, businesses generally can’t recover PST on these services through input tax credits. It becomes another cost of doing business, working its way through the supply chain and ultimately showing up in higher prices.

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This tax hike was questionable policy when it was announced. The trade war makes it indefensible today.

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Premier Eby has been eager to position himself against Donald Trump. There is plenty about Trump’s trade policy worth opposing. But denouncing Washington is the easy part. Running British Columbia’s economy is harder.

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The NDP has been in power for nine years. B.C. enters this trade war with economic growth forecast at just 1.3 per cent, a projected $13.3-billion deficit, and taxpayer-supported debt forecast to climb sharply.

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If Trump is raising the cost of getting B.C. products into the U.S., our provincial government should be looking for every reasonable way to lower the cost of producing them here.

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If businesses need customers outside the U.S., we should make it easier to invest, expand and enter new markets.

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And if Canada is serious about tearing down interprovincial trade barriers, provinces should not simultaneously add new costs to Canadians doing business with one another.