HST Referendum

Voter turnout numbers for the HST Referendum in British Columbia are expected to be announced this week, with the outcome disclosed at the end of August or early September. What are the issues in this debate?

According to the Government of B.C., the province's households have seen an average annual increase in sales tax of $350 on most of their day-to-day expenditures as a result of the HST. However, families earning less than $10,000 annually have had a net gain as result of the B.C. HST Tax Credit. The province has increased the basic personal exemption for all British Columbians and will lower the HST rate from 12% to 10% by 2014 if the voters decide to keep it.

There are pros and cons for businesses when it comes to the HST. It should be a simpler system than the old GST/Provincial tax regime. Lower prices on supplies should be the result of the new tax but that is not always the case. Enterprises dealing in high-end goods and services such as home renovations have reported that the higher sales tax can be a deterrent for sales. If the province retains the HST it will postpone the planned small business tax rate cut and increase the corporate tax rate from 10 to 12%.

Alan Rowell, DFA-Tax Services Specialist from Stoney Creek, ON, where the HST is alive and well, weighs in with this comment: "On the surface this may appear to be six of one and half a dozen of the other; however, other issues do come into play in this referendum. With HST legislation, input tax credits received by suppliers will reduce operating and supply costs to businesses which should, by virtue of competition, result in cost savings being passed on to consumers.î

Anticipated increased corporate taxes in conjunction with the proposed elimination of HSTand return of PST rates will increase the cost of operating a business. That's worrisome, says Mr. Rowell, as it could ultimately affect employment in B.C., given the current economic storm.

For detailed information on the HST in British Columbia check out the provincial website: HST in BC. An opposing view can be found here.

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