Brace yourself for new tax

By Elinor Florence

Pioneer Publisher

August 14, 2009

This time next year, we might all be paying something called a Harmonized Sales Tax in BC.

The ‘harmony’ reflects the marriage of the current five percent Goods and Services Tax with the current seven percent Provincial Sales Tax.

Business that formerly collected and itemized both taxes will now charge a single 12 percent tax.

And businesses that didn’t have to charge Provincial Sales Tax in the first place – businesses like ours, for example – will now have to collect an extra seven percent from their customers.

Newspapers are among a host of businesses that will be forced to charge and remit a tax they never did before.  Among the most vocal opponents of the new tax are restaurants and home builders.  Previously restaurant meals and new homes weren’t subject to the provincial tax.  And many other services will now be subject to the extra seven percent, such as haircuts, accounting and dry-cleaning.  There are also some exemptions, such as groceries.

The rationale by the BC government is that the new ‘harmonized’ tax will pass more of the tax burden onto consumers, and relieve the tax burden on businesses by allowing them to claim additional business input tax credits.

According to government: “This measure will reduce taxes on business investment by as much as 40 percent or $1.9 billion annually.  It will dramatically reduce business administration costs by $150 million annually.  It will increase BC’s competitiveness, attract new investment and stimulate job growth.”  That’s why the BC Chamber of Commerce supports the measure, although many individual members disagree.

The HST – which requires the approval of both BC’s Legislative Assembly and the Parliament of Canada – can still be defeated if enough people raise their voices in protest.  You have one year to complain, and the clock is ticking.