HST Coming to BC

British Columbia Premier Gordon Campbell has announced that his province will be introducing the Harmonized Tax (HST). The province will harmonize its provincial sales tax (PST) with the federal GST creating a single 12 per cent sales tax. The new tax is scheduled to come into effect July 1, 2010.

B.C.’s HST will be the lowest in Canada, noted provincial Finance Minister Colin Hansen. The province does admit, though, that the new tax will increase the cost of some services in the short term, as these were previously exempt from the PST. However, government leaders explain that the new HST will boost investment and ultimately cut costs.

Addressing the possible rise in prices, Mr. Hansen explained that the PST is often embedded in the price of goods, such that the consumer does not see it at the register. He feels that the cost savings for businesses, resulting from the new tax, should be passed on to consumers. Provincial leaders estimate that over $2 billion in costs will be removed from B.C. businesses.

Similar to the PST, the new tax will also include exemptions. The HST will not be applied to gas and diesel fuels, children’s car seats, children’s shoes and clothing, diapers and feminine hygiene products. The exemptions will come as point-of-sale rebates. In addition, there will be a partial rebate of the provincial portion of the HST on houses up to $400,000. These houses will bear no more tax than under the current PST and houses above this amount will benefit from a flat rebate of approximately $20,000.

The federal government has pledged $1.6 billion in transitional funding as well as paying for the full cost of administration, thus generating an additional $30 million in savings annually to the province.

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