Corpcentre's Blog

December 17, 2009

A Province Divided

It would appear that all is not well in Canada’s westernmost province. The implementation of the Harmonized Sales Tax (HST) looms on the horizon for July 2010 and the ground underfoot is shaky with protests and counter-protests.
 
Critics of the new tax claim that the Liberal government of Gordon Campbell organized strong support from within the business community to endorse the HST. The business community refutes any such instigation by the government. Business leaders in B.C. claim that, following Ontario’s lead in adopting this new tax, they realized that the inherent benefits far outweigh the disadvantages and, thus, have supported the government’s tax proposals. They see the new tax as a way to stimulate the province’s productivity which, according to experts, has been “dismal” for the last two decades. While big business agrees that there will be short term problems with the HST, they feel that the tax will lead to long term economic improvement in investments, competitiveness, and consumer prices.
 
Consumers are slow to give their endorsement. That which is good for business means taking more from the consumer’s pocket. The bottom line is that consumers will now pay more for many goods and services that will carry the HST tag but are currently exempt from PST or GST. This disgruntlement has given way to public protest about other government policies that have not found favour with the public.
 
As a result of the recession, the B.C. government has been forced to curtail some budgets and trim expenses on existing programs. Indeed, with the new budget looming, the public is awaiting the latest round of budget cuts. A prevailing opinion is that the HST was adopted in order to funnel more money into an ailing provincial budget at the public’s expense. During the election campaign, Premier Campbell pledged a deficit ceiling of $495 million. As this summer approached, that pledge grew to a whopping $1 billion and the end of summer saw a projection of that estimate being tripled. With numbers like these being bantered about, neither side is quite sure about the true economic state of the province.
 
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December 15, 2009

Harmony in B.C.? The implementation of the Harmonized Sales Tax (HST)

July 1, 2010 is rapidly approaching in British Columbia. While it will be a national holiday as it is every year, it is also the date that the province will implement the Harmonized Sales Tax (HST). The jury is still out on whether it will be good for the province or not.
 
The answer, at this point, depends solely on who is asked. There are clearly going to be winners and losers in this new tax. The decision to implement the new tax is final. The actual impact is still theoretical.
 
It seems that the majority of the B.C. business community is clearly in favour of the HST. With 130 jurisdictions around the world using an HST style tax, B.C. simply cannot ignore joining the fray, if it wishes to compete for business investment. The province must offer the same tax advantages to the business community, lest businesses move elsewhere to obtain the benefits. Similarly, with e-commerce on the rise, retailers and manufacturers are competing with provinces like Ontario, which voted to adopt the HST.
 
A major challenge lies with the hospitality industry and other business sectors that currently don’t have to charge PST, or services that don’t have to charge GST. Under the new HST, these businesses and services will have no way getting back the HST. In essence, here will be the new tax burden with no relief in sight. Also, the average consumer will pay more taxes. Consumers cannot claim any portion of the HST but will pay more for products and services that are currently tax exempt but will not be so under the new HST.
 
Economists claim that implementing the HST is the right move for B.C. Come July 2010, B.C. will see if the economists are correct.
 
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August 5, 2009

HST Coming to BC

Filed under: canada economy,canada incorporation,HST,incorporate in BC — corpcentre @ 4:33 pm

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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