Thursday, February 18, 2010

Dipping my toes into provincial issues

Tax policy is a useful tool for rewarding good behaviour and discouraging the bad. We have been doing it for years with tobacco and alcohol taxes and over the last several years, starting to shift some taxes to carbon emissions or providing incentive programs to conserve energy, water etc.

In 1981 in British Columbia, the Social Credit government removed sales taxes on bicycles, the Minister of the day suggesting that "it is consistent with a healthier, quieter and more energy efficient society". Remarkable for the era, as the reputation and composition of the Socred government was one where the cabinet was made up of used car dealers happy to spread suburban sprawl across the province.

The measure was supported by the opposition NDP, whose leader Dave Barrett would have been well acquainted with the advantages of cycling as both a means of transportation and a positive benefit to individual and community health. His government (1972 to 1975) took the first steps towards establishing the Galloping Goose trail when they claimed the abandoned rail corridor for future recreational use. It would be almost 20 years before that visionary project started to physically take shape, but the stage had been set.

Coincidentally, Barrett's son Joe was a pretty fast racing cyclist, no doubt exposing the father to a subculture that may have inspired some support for the sport. Joe went to Europe on Canada's junior national team and burnt up the roads in Belgium before returning home and joining one of the very few sponsored teams on the road in the province. He still kicks my butt when we go for a fast ride together.

Lately, the tax exemption for bicycles has been targeted in the new Harmonized Sales Tax recently introduced by the federal and provincial governments. New bicycles will be hit with a 7% price increase, the full impact of the sales tax on a previously exempt class of products. Elsewhere in the economy, the projected HST impact is a bit below 1%, a big enough inflationary hit, but for bike riders, that impact will be a much sharper sting.

I was in the bike business (in Ottawa) in the 1980s, and being a government town, government policy always had a more amplified affect on our business than perhaps elsewhere. So when wage freezes or public service cuts were implemented, we felt the impacts. I left the business in 1989, but the store survived until another big round of federal civil service cuts put the place out of business in the 90s.

Back at home here in Victoria, the impacts of the HST on bike businesses may be significant. It's a pretty healthy industry, but every dollar counts on the small margins bike stores make, and those in the business are there for the passion more often than the money. It's going to hurt them.

More importantly, at least from a public policy perspective, the tax is counter-intuitive to the government's stated goal of reducing carbon emissions and helping to address climate change. Transportation is a signficant source of our greenhouse gas problems and if we hope to shift people to more sustainable habits, we need to help them along. A punitive tax is not a good way of doing this.

To add insult to injury, motor fuels are exempt from the new tax. It's a great benefit for drivers. How does that help us meet our objectives on climate change?

It may not be too late. The province does have the option of identifying product that they want exempted from the tax and can ask the federal government to allow the exemption. They've done so with motor fuels and some other goods, but if we want to level the playing field on transportation, bikes deserve the same break. It makes no sense to give carrots for driving and beat cyclists with the stick of tax policy.

You can join the protest on Wednesday, March 3rd at the provincial legislature. Lana Popham, MLA for Saanich South is holding a rally on the steps starting at 12 noon. Let's help her send the message to the government that we need sensible tax policies that reward activities we want to promote and help address issues of health living and environmental responsibility.

See more about the issue at:

I'll be there. Hope to see you with your bike.


1 comment:

  1. Hi John,

    I think you've expressed the argument very well here. Can the BC government explain how a new tax on cycling helps us reach BC`s climate change goals?

    The only point I would add is re. the HST in general. For those who are convinced the HST should be scrapped - and that is the majority of British Columbians, from the polling I've seen - the rally on Wed Mar 3 is for you as well. There will be a Fight HST table to get info for the upcoming official provincial petition to stop the HST. And for many, jacking up the price of a healthy and eco-friendly mode of transportation is just one more reason why the HST is a deeply flawed idea. -S. Check out for the latest info.