This article is the first in a two-part series on regressive policies in British Columbia. Part one discusses the harmonized sales tax (HST) and part two will discuss the promotion of gambling.

 

The progressive taxation system is in many ways the bedrock of the post-war capitalist state. Originally implemented to finance wartime state expenditure, progressive taxation was re-engineered in the post-war and post-depression period to finance spending on critical social concerns such as health care and education.

 

During the strife of the depression, long-established ideas of democratic governance in the workplace and the eradication of surplus value from unpaid labour once again came to the fore. Rather than restructuring the political economy to make it fair, thereby eliminating the need to redistribute wealth via progressive taxation, a ‘consensus’ was reached between often violent popular labour movements and capital. This post-depression Keynesian stopgap was implemented, in part, to stave off popular opposition to the depravities of neoclassical economics that held, amongst other things, that free markets would automatically provide full employment so long as workers were flexible in their wage demands.

 

Intrinsic to the taxation system is its progressive nature, as explained by Adam Smith in The Wealth of Nations:

 

The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater

part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess… It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.

 

A topic of prime concern at the moment is the implementation of the HST. Argued to be a tool to maximize efficiencies, the HST rolls back exemptions on goods previously immune from sales tax. A sales tax is by definition a regressive form of taxation, as lower socio-economic classes direct a relatively larger share of their income to consumable items relative to upper classes that allocate a relatively larger share of their income towards saving and investment.

 

As a result we are witnessing the implementation of a policy that disproportionately targets the poor and working poor in an effort to bolster government revenues; government revenues that are being increasingly directed away from health care and education – where private enterprise has relatively little to gain – and towards tendered infrastructure spending (i.e. Olympic venues) – where private enterprise sees impressive returns on investments funded by the public.

 

The HST becomes yet another tool in the war chest whereby the poor and working poor finance government spending that is profitable for private enterprise and the upper classes; illustrating once again the age-old adage: capitalism for the poor and socialism for the rich.