Tom Fletcher - Vernon Morning Star Published: July 23, 2009 6:00 PM
The B.C. government is joining Ontario in harmonizing its sales tax with the federal GST, effective July 1, 2010.
Premier Gordon Campbell and Finance Minister Colin Hansen announced the change in Vancouver Thursday, presenting it as a revenue-neutral way to simplify the system for business and encourage new investment.
“This is the single biggest thing we can do to improve B.C.’s economy,” said Campbell. “This is an essential step to make our businesses more competitive, encourage billions of dollars in new investment, lower costs on productivity and reduce administrative costs to B.C. taxpayers and businesses. Most importantly, this will create jobs and generate long-term economic growth that will in turn generate more revenue to sustain and improve crucial public services.”
The harmonized tax will incorporate the seven per cent provincial sales tax and the federal goods and services tax, currently at five per cent. It will mean a combined rate of 12 per cent, which Campbell said will result in lower overall taxes than Alberta and Ontario.
“The PST is an outdated, inefficient and costly tax, some of which is hidden in the price of goods and services and passed on to and paid by consumers,” said Hansen.
The change means provincial sales tax will now apply to a wide range of services that were not taxed before. Currently PST is charged on legal services in B.C., but the new harmonized tax or HST will extend to everything from haircuts to oil changes that are currently subject to GST only.
The harmonized sales tax has been a goal of the federal government for some time, and that’s why it sweetened the deal with a one-time transfer to B.C. $1.6 billion to cover transition costs, Campbell said.
The B.C. government has resisted calls from Ottawa to follow suit with Maritime provinces, Quebec and Ontario. Hansen said one important change made by Ottawa was to allow point-of-sale rebates on the new HST for gasoline and diesel fuel for vehicles. This allows B.C. to adjust the HST downward as the carbon tax on fossil fuels increases.
There will also be HST exemptions on books, children’s clothing and footwear, child car seats and booster seats, diapers and feminine hygiene products.
Hansen said the implementation will result in a drop in revenues to the province initially, moving to a slight net increase in later years.
Both Campbell and Hansen stressed that in addition to the administration burden of two different sales tax regimes, the current PST is paid by businesses on the materials they use, resulting in a hidden tax that increases costs.
The finance ministry calculates that moving to the HST will save about $880 million for the B.C. construction industry, $140 million for manufacturing, $210 million for transportation and $140 million for the forest industry.
Having fewer forms to fill out is expected to save B.C. businesses another $150 million.
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Don Quixote Note: Take a look at your hydro bill and terasen gas bill. At present these are PST (7%) exempt for residential customers. On July 1 2010 you will have an increased cost for the HST. As noted below the ICE Tax and Carbon Tax do not at present attract PST but GST is collected on them. LOOK for a tax on a tax when the HST comes into effect. The present 3% franchise fee on Vernon Terasen gas customers raises $581,000 (est.) in 2008. A 7% PST would extract $1,355,000 in increased taxes from the Terasen Gas users in the City of Vernon. Hydro Electrical users will see an additional hit also!
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Innovative Clean Energy (ICE) Fund Levy Extension:
The provincial sales tax (PST) exemption for electricity, natural gas, propane and fuel oil used for residential purposes does not apply to the levy.
The B.C. government is joining Ontario in harmonizing its sales tax with the federal GST, effective July 1, 2010.
Premier Gordon Campbell and Finance Minister Colin Hansen announced the change in Vancouver Thursday, presenting it as a revenue-neutral way to simplify the system for business and encourage new investment.
“This is the single biggest thing we can do to improve B.C.’s economy,” said Campbell. “This is an essential step to make our businesses more competitive, encourage billions of dollars in new investment, lower costs on productivity and reduce administrative costs to B.C. taxpayers and businesses. Most importantly, this will create jobs and generate long-term economic growth that will in turn generate more revenue to sustain and improve crucial public services.”
The harmonized tax will incorporate the seven per cent provincial sales tax and the federal goods and services tax, currently at five per cent. It will mean a combined rate of 12 per cent, which Campbell said will result in lower overall taxes than Alberta and Ontario.
“The PST is an outdated, inefficient and costly tax, some of which is hidden in the price of goods and services and passed on to and paid by consumers,” said Hansen.
The change means provincial sales tax will now apply to a wide range of services that were not taxed before. Currently PST is charged on legal services in B.C., but the new harmonized tax or HST will extend to everything from haircuts to oil changes that are currently subject to GST only.
The harmonized sales tax has been a goal of the federal government for some time, and that’s why it sweetened the deal with a one-time transfer to B.C. $1.6 billion to cover transition costs, Campbell said.
The B.C. government has resisted calls from Ottawa to follow suit with Maritime provinces, Quebec and Ontario. Hansen said one important change made by Ottawa was to allow point-of-sale rebates on the new HST for gasoline and diesel fuel for vehicles. This allows B.C. to adjust the HST downward as the carbon tax on fossil fuels increases.
There will also be HST exemptions on books, children’s clothing and footwear, child car seats and booster seats, diapers and feminine hygiene products.
Hansen said the implementation will result in a drop in revenues to the province initially, moving to a slight net increase in later years.
Both Campbell and Hansen stressed that in addition to the administration burden of two different sales tax regimes, the current PST is paid by businesses on the materials they use, resulting in a hidden tax that increases costs.
The finance ministry calculates that moving to the HST will save about $880 million for the B.C. construction industry, $140 million for manufacturing, $210 million for transportation and $140 million for the forest industry.
Having fewer forms to fill out is expected to save B.C. businesses another $150 million.
-------------
Don Quixote Note: Take a look at your hydro bill and terasen gas bill. At present these are PST (7%) exempt for residential customers. On July 1 2010 you will have an increased cost for the HST. As noted below the ICE Tax and Carbon Tax do not at present attract PST but GST is collected on them. LOOK for a tax on a tax when the HST comes into effect. The present 3% franchise fee on Vernon Terasen gas customers raises $581,000 (est.) in 2008. A 7% PST would extract $1,355,000 in increased taxes from the Terasen Gas users in the City of Vernon. Hydro Electrical users will see an additional hit also!
---------------------
Innovative Clean Energy (ICE) Fund Levy Extension:
The provincial sales tax (PST) exemption for electricity, natural gas, propane and fuel oil used for residential purposes does not apply to the levy.
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