B.C. ELIMINATES PST

March 30, 2010 VICTORIA – The introduction of the Consumption Tax Rebate and Transition Act proposes to eliminate the Provincial Sales Tax (PST) and the Hotel Room Tax, streamlining the regulatory burden on business and supporting the transition to the HST, announced Finance Minister Colin Hansen today. “Our current provincial sales tax is a substantial and complex statute that costs B.C. businesses millions of dollars a year in administration and compliance,” said Hansen. “By reforming our tax system and introducing the HST, businesses will be more competitive and our province will see an increase in investment, productivity and economic growth.” Fulfilling the Province’s commitment under the Comprehensive Integrated Tax Coordination Agreement with the federal government to wind down PST by July 1, 2010, the new Consumption Tax Rebate and Transition Act eliminates the seven-per cent PST and introduces HST-related measures designed to mitigate the impacts of the HST on British Columbians.

Mitigation measures include:

· A B.C. HST credit to help low- and modest-income families.

· A point-of-sale rebate for the seven-per cent provincial portion of the HST on motor fuels, books, children’s-sized clothing and footwear, children’s car seats and booster seats, children’s diapers and feminine hygiene products.

· A provincially administered rebate and credit for the provincial portion of HST payable on energy purchased for residential use.

Consistent with the tax treatment of the private sale of vehicles, boats and aircraft in other HST provinces, the act includes the continuance of the tax, but at a rate of 12 per cent. The act also includes amendments to repeal the Innovative Clean Energy (ICE) Fund Levy on residential and commercial energy, the $5 battery levy, the passenger vehicle rental tax, the surtax on motor vehicles and multijurisdictional vehicle tax.

The act also eliminates the provincial portion of the hotel room tax, but continues the two per cent additional hotel room tax levied on behalf of local governments, regional districts and destination marketing organizations to raise revenue for local tourism marketing.

To illustrate the importance of the high and growing cost of health care for British Columbians, the act includes a requirement to annually table a health-care funding plan and report to show health-care expenditures and revenues from the HST, tobacco taxes, Medical Service Plan (MSP) premiums, federal health-care transfers and lottery revenues from the Health Special Account.

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Consumption Tax Rebate and Transition Act – Supporting the Transition to HST

The amendments:

• · Eliminate the PST and various levies, such as the ICE levy on residential and commercial energy.

• Provide transitional provisions to coordinate the elimination of the PST with the implementation of the HST.

• · Eliminate the provincial portion of the hotel room tax and provide transitional provisions to co-ordinate the elimination of the provincial tax with the implementation of the HST. The amendments will not affect the additional hotel room tax levied on behalf of local governments, regional districts and destination marketing organizations to raise revenue for local tourism marketing.

• · Introduce a provincial credit for the provincial portion of the HST payable on residential energy.

• · Establish point-of-sale rebates for the provincial portion of the HST payable on motor fuels and certain other items.

• · Continue the provincial tax on private sales of vehicles, boats and aircraft, but at a rate of 12 per cent.

• · Introduce a refundable B.C. HST Credit of $230 per person targeted to low- and modest-income individuals and families. The new credit will be provided together with the GST and climate action credits effective July 1, 2010.