Shift in policy means facilities won't have to cut staff
By Robert Matas, Globe and Mail
For-profit residential care homes have become the most recent group in a growing list of those who will not be paying the new 12 per cent HST in B.C.
John Dyble, deputy minister of health services, has directed health authorities to ensure that the facilities do not face losses as a result of the HST. The measures are intended "to minimize the impact on patient care," Mr. Dyble said in correspondence to the province's health authorities released yesterday to the media by the BC Care Providers Association.
The shift in government policy, which will reduce costs by $6-million, means for-profit facilities will not have to cut staff, BCCPA president Christine Nidd said yesterday in an interview.
Care homes in Victoria, Vancouver, North Vancouver, Maple Ridge and New Westminster would have laid off staff if the government had refused to mitigate the impact of the HST, said Ms. Nidd, who is also an executive at Revera, which runs 18 facilities in B.C. and more than 200 retirement and long-term care homes across Canada and the United States. "It's a fabulous news story for us," she said.
The tax break for care homes is the latest retreat by the provincial government since the tax was announced last summer. Finance Minister Colin Hansen in January has given $235-million worth of rebates to hospitals, public schools, universities and colleges. A few months earlier, Mr. Hansen had softened the blow on the new home construction sector, giving up an estimated $80-million in revenue.
"Each time the government does something, it keeps hope alive for other groups that would like special treatment," said Simon Fraser University professor Jon Kesselman, who holds the Canada Research Chair in Public Finance.
The adjustments in the new tax reflect the sweeping nature of the changes, Prof. Kesselman said in an interview. The government would probably prefer to avoid exemptions and rebates that would reduce revenue, complicate the system and lead other sectors to seek concessions. But it's hard to anticipate and identify "all the nooks and crannies," he said.
Relief for a care home may have more appeal than for restaurants, which have carried out a vocal campaign against the HST, he added.
The HST, which the Liberal government in B.C. will start collecting on July 1, was announced weeks after a provincial election in which Liberal candidates stated they were not planning to adopt the tax. The HST will harmonize the 7-per-cent federal good and services tax with the 5-per-cent provincial sales tax.
It will reduce tax on new investment by over 40 per cent, but consumers will pay more for goods and services now exempt from PST, such as haircuts, school supplies, taxi rides, ski passes, phone bills and restaurant meals. The government initially exempted home-energy costs and provided for a point-of-sale HST rebate on gasoline. Household goods such as children's clothing and shoes, car seats, diapers and feminine hygiene products will also be HST exempt.
Ms. Nidd said collecting HST from care homes would not make sense. The care homes receive funding from the health ministry, she said. Having those funds transferred to the ministry of finance would not accomplish anything.
The care homes rely on government financing to retain staff, she added. "Our costs are fixed and, really, the only way we could find to make ends meet [after HST comes into effect] would be to reduce staffing levels. ... We could make little cuts in supplies but the biggest cost is staffing and that's where you have to find the savings."
NDP critic Bruce Ralston, who has called for the government to abandon the HST plan, said yesterday the exemption will be good for the care homes but will cause ill feeling elsewhere.
"It creates an uneven playing field and breeds resentment from other businesses," he said.
The HST was set up as a broad tax with very few exemptions, he added. "They are back-tracking on that. These are implementation problems that result from imposing an unfair tax and from shifting the tax burden from business to consumers and small business," Mr. Ralston said.
