Jump to content

           



Latest VV Article


Victoria International Airport “Q&A” with President & CEO Geoff Dickson

VibrantVictoria’s question-and-answer special feature with the president and CEO of the Victoria Airport Authority answers a series of questions relating to the Victoria International Airport (YYJ) as posed by members of VibrantVictoria’s discussion forum. The questions focus on marketing the airport, flights and airlines, and airport infrastructure. [Read more]


Photo

Harmonized Sales Tax (HST) discussion


  • Please log in to reply
1054 replies to this topic

#1 Bob Fugger

Bob Fugger

    Chief Factor

  • Banned
  • 2,395 posts
  • LocationSouth Central CSV

Posted 23 July 2009 - 11:05 AM

NEWS RELEASE


For Immediate Release
2009PREM0017-000141
July 23, 2009

Office of the Premier

Ministry of Finance



HARMONIZED SALES TAX TO BOOST INVESTMENT, JOB CREATION


VICTORIA – British Columbia intends to harmonize its provincial sales tax with the federal Goods and Services Tax effective July 1, 2010, to boost new business investment, improve productivity, enhance economic growth and create jobs, Premier Gordon Campbell and Finance Minister Colin Hansen announced today.

“This is the single biggest thing we can do to improve B.C.’s economy,” said Premier Gordon 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.”

B.C. will have the lowest Harmonized Sales Tax (HST) in Canada, by combining the seven per cent B.C. Provincial Sales Tax (PST) with the five per cent federal Goods and Services Tax (GST), for a single sales tax rate of 12 per cent. All other provinces with an HST, and the one proposed by Ontario, have a rate of 13 per cent.

It’s estimated the HST will remove over $2 billion in costs for B.C. businesses. That includes an estimated $1.9 billion of sales tax removed from business inputs, which enhances competitiveness, increases investment and productivity and, ultimately, increases prosperity. For example, some savings would include about $880 million for the construction industry, $140 million for manufacturing, $210 million for the transportation industry, $140 million for the forestry sector, and $80 million for mining and oil and gas. In addition, B.C. businesses will also save an estimated $150 million annually in compliance costs.

Similar to PST exemptions, the B.C. HST will provide consumers with point-of-sale rebates on a number of products including gasoline and diesel fuel for motor vehicles, books, children’s-sized clothing and footwear, children’s car seats and car booster seats, diapers and feminine hygiene products.

“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 Minister of Finance Colin Hansen. “Evidence from the Atlantic provinces showed that the hidden tax is removed very quickly, with the majority of the savings passed through to consumers in the first year.”



The proposed HST will include:
· Unlike any other province, B.C. will provide an automatic point-of-sale rebate so consumers do not have to pay the provincial portion of the HST at the pump for purchases of gasoline and diesel fuel for motor vehicles, including any biofuel components.
· A partial rebate of the provincial portion of the single sales tax for new housing to ensure that new homes up to $400,000 will bear no more tax than under the current PST system, while homes above $400,000 will receive a flat rebate of about $20,000.
· A refundable B.C. HST Credit paid quarterly with the GST and carbon tax credit to offset the impact of the tax on those with low incomes.
· A temporary delay in the provision of input tax credits for certain purchases by businesses with taxable sales in excess of $10 million.

The federal government will provide British Columbia with $1.6 billion in transitional funding in recognition of the improvement this change will make to business competitiveness in Canada. The full cost of administration will be borne by the federal government, saving the Province an estimated $30 million annually in administration costs. With this decision, the Province can now move forward and work with industry to implement the new HST.

More than 130 countries, including 29 of the 30 OECD countries, along with four Canadian provinces, have adopted taxes similar to the HST, called value-added taxes, which reimburse most businesses for the tax they pay on their inputs. Ontario will also move to a single, value-added sales tax on July 1, 2010. With B.C., six of Canada’s 10 provinces will have a similar sales tax by July 1, 2010. Implementation of a single sales tax in B.C. would immediately reduce costs and enhance the competitiveness of B.C. manufacturers and exporters both nationally and internationally and bring B.C. into line with what is viewed as the most efficient form of sales taxation in the world.

Since 2001, the B.C. government has taken significant steps to reduce taxes for B.C. families and improve the competitiveness of the B.C. tax system for business. The overall tax burden is generally the second lowest in Canada for B.C. families and will remain so after harmonization, primarily as a result of significant provincial personal income tax cuts, while corporate income taxes have been reduced and corporate capital taxes have been eliminated.

Once fully implemented, the single sales tax will make B.C. one of the most competitive jurisdictions in the industrialized world for new investments. The proposed changes are subject to approval by the parliaments of Canada and British Columbia.


-30-



Contact:

Jamie Edwardson
Communications Manager
Ministry of Finance
250 356-9872
Dale Steeves
Communications Director
Office of the Premier
250 361-7783

For more information on government services or to subscribe to the Province’s news feeds using RSS, visit the Province’s website at www.gov.bc.ca.


Great, so now most everything that is not subject to PST (versus PST exempt, which is slightly different) will be subject to 12% HST. This will include things like restaurant meals, baked goods, gym memberships. What a great hidden tax hike.

It will be interesting to see what they do with provincial consumption taxes that are not PST - like the 10% liquor tax. Does this mean my pint of Strongbow will now cost x + 22%?

#2 VicHockeyFan

VicHockeyFan

    Super Moderator

  • Moderator
  • 20,123 posts

Posted 23 July 2009 - 11:28 AM

Liquor tax is PST. Well, it's actually SST, the correct term for the provincial tax. It's just set at 10% rather than 7%.

#3 sebberry

sebberry

    Super Moderator

  • Moderator
  • 9,810 posts
  • LocationVictoria

Posted 23 July 2009 - 12:27 PM

Great, so now most everything that is not subject to PST (versus PST exempt, which is slightly different) will be subject to 12% HST. This will include things like restaurant meals, baked goods, gym memberships. What a great hidden tax hike.

It will be interesting to see what they do with provincial consumption taxes that are not PST - like the 10% liquor tax. Does this mean my pint of Strongbow will now cost x + 22%?


I hope you didn't vote Liberal :P

#4 Bob Fugger

Bob Fugger

    Chief Factor

  • Banned
  • 2,395 posts
  • LocationSouth Central CSV

Posted 23 July 2009 - 12:43 PM

Liquor tax is PST. Well, it's actually SST, the correct term for the provincial tax. It's just set at 10% rather than 7%.


Technically, both are the Social Service Tax (SST), which is (as you state) the correct term for the more colloquial SST. It's just that the SST charged on booze is 10%, while the rate for most everything else is 7%.

So my original query stands: does it mean that liquor tax will decrease (i.e., HST of 12% only), OR will it increase (i.e., HST of 12% + SST of 10% = 22% total booze tax). It's a fair question because this new tax regime is currently mute on the topic of different rates of tax.

As well, what does this mean for the Hotel Room Tax? Currently it is 8%, plus municipalities can apply to have the Province collect an additional 1-2% on their behalf. Does this render the HRT dead, or when you go to Whistler, will it be HRT 8% + 2% Destination Tax + HST 12% = 22%?

#5 spanky123

spanky123
  • Member
  • 3,142 posts

Posted 23 July 2009 - 01:15 PM

I don't see how it saves businesses any money. What about the $1200 a year businesses get to keep for collecting PST? I assume that will be gone.

#6 yodsaker

yodsaker
  • Member
  • 1,280 posts

Posted 23 July 2009 - 01:40 PM

I used to write crap like that news release.
Cliches that explain nothing, lipstick on a pig whatever.
Other than an actual tax cut I'm unaware of any tax tinkering that "boosts investment, job creation".

#7 AnonAnnie2

AnonAnnie2
  • Member
  • 151 posts

Posted 23 July 2009 - 03:29 PM

Hey I schlep pens and pencils, take a few photos and am not a tax expert so don't take this seriously.

My understanding is
business will not have to track two taxes, report etc. (ensuring compliance is a cost)
been there done that and I suspect most businesses will super like that.

From my calculations most things we buy will be subject to a lower tax...because the tax is lower.

Businesses will no longer be charged tax (the business itself)...so, if they aren't charged tax that means ...um, more money in the businesses pocket which the owners will go buy new boats, cottages, etc. with? hire new people? either way the economy wins. I know sounds to simple, prolly is.

no tax grab that I can see here, its all good. Move along.

#8 Mike K.

Mike K.
  • Administrator
  • 18,476 posts

Posted 23 July 2009 - 03:32 PM

From my calculations most things we buy will be subject to a lower tax...because the tax is lower.

Could you clarify what you mean by lower? 7% PST + 5% GST = 12%. The new HST = 12%, a flat 12% on all goods, if I understand it correctly.

Skyscraper Source Media Inc.

July 15, 2014: [Mayor] Fortin told C-FAX's Bruce Williams that he expects the [Johnson Street Bridge] project to be completed "on time and on budget."


#9 sebberry

sebberry

    Super Moderator

  • Moderator
  • 9,810 posts
  • LocationVictoria

Posted 23 July 2009 - 03:46 PM

I wonder if goods purchased for resale will be exempt from any of the HST?

#10 AnonAnnie2

AnonAnnie2
  • Member
  • 151 posts

Posted 23 July 2009 - 04:22 PM

I wonder if goods purchased for resale will be exempt from any of the HST?


My understand is YES.

#11 AnonAnnie2

AnonAnnie2
  • Member
  • 151 posts

Posted 23 July 2009 - 04:29 PM

Could you clarify what you mean by lower? 7% PST + 5% GST = 12%. The new HST = 12%, a flat 12% on all goods, if I understand it correctly.


Right you are..it is 12%!!!...
not on ALL goods and businesses are not taxed. I work for business and I have my own business...savings all over the place! *shrugs* I'm a glass half-full kinda gal.

#12 Bob Fugger

Bob Fugger

    Chief Factor

  • Banned
  • 2,395 posts
  • LocationSouth Central CSV

Posted 23 July 2009 - 04:50 PM

My understand is YES.


Yes and no. Rather than get the point-of-sale exemption that you used to get by flashing your SST Reg number, you will pay HST on your inputs.

You net that against the HST you collect from your customers. At the end of the day, you either get a refund or a bill, depending your sales vs. purchases.

#13 Roger

Roger
  • Member
  • 284 posts

Posted 23 July 2009 - 04:51 PM

News release from Canadian Restaurant & Foodservices Association - click here

HST tax increase delivers huge hit to B.C. families and tourists


VANCOUVER, July 23 /CNW/ - The harmonized sales tax announced today will
deliver another blow to British Columbia's struggling tourism industry. The
tax on restaurant meals will jump from 5% to 12%, hitting families in the
wallet and discouraging international tourists.

"This government made a promise less than three months ago to the people
of British Columbia that there would be no new taxes," says Mark von
Schellwitz, Vice President Western Canada for the Canadian Restaurant and
Foodservices Association (CRFA). "Harmonization will result in a permanent tax
shift of hundreds of millions of dollars to our customers."

To make matters worse, a 12% tax will likely accelerate the sharp decline
in international tourists visiting British Columbia. "U.S. tourists are
already shocked by the 5% GST when they dine out in B.C.," says von
Schellwitz.

The HST will also discourage local restaurant customers, who can buy the
same or similar food tax-free at grocery stores. Grocery stores now offer
frozen, heat-and-eat versions of just about every item on a restaurant menu -
from lasagne to samosas - and all tax free.

"As one of the largest employers in British Columbia, we're deeply
concerned about the damage the HST will do to restaurant owners, their
customers and their employees," says Garth Whyte, CRFA President and CEO.
"Government should be creating the conditions for these businesses to prosper
and grow. The significant tax increase on restaurants caused by harmonizing
the PST and GST in this province will do precisely the opposite."

The HST will result in a permanent drop of $750 million a year in
restaurant sales in British Columbia - or nearly $50,000 per year for the
average restaurant - according to a CRFA calculation using an econometric
model from the Conference Board of Canada.

More than 173,000 people, representing 7.5% of the workforce, are
employed in British Columbia's restaurant industry.


#14 Roger

Roger
  • Member
  • 284 posts

Posted 23 July 2009 - 05:01 PM

BC already has the dreaded Property Transfer Tax which makes houses more unaffordable. Now the HST will increase the cost of new homes over 400K (basically any new home in Victoria). This will have a big impact on new home builders. Here are the details : (Click here for source)

A partial rebate of the provincial portion of the single sales tax for new housing to ensure that new homes up to $400,000 will bear no more tax than under the current PST system, while homes above $400,000 will receive a flat rebate of about $20,000.

And when you sell your home it will cost you more for the services of your lawyer and real estate agent. They currently charge 5% GST on their services and this will rise to 12% with the harmonized sales tax (HST).

Renters will see rent increases as the landlords pass on the increased costs for maintenance, repairs, accounting and legal services and utility costs due to increased taxes.

#15 AnonAnnie2

AnonAnnie2
  • Member
  • 151 posts

Posted 23 July 2009 - 05:12 PM

Ok so its a 'news release' throwdown? Ha! Bet I can out-link you!

The government estimates the HST will remove over $2 billion in costs for B.C. businesses, including an estimated $1.9 billion of sales tax removed from business inputs.

Similar to PST exemptions, the B.C. HST will provide consumers with point-of-sale rebates on a number of products including gasoline and diesel fuel for motor vehicles, books, children’s-sized clothing and footwear, children’s car seats and car booster seats, diapers and feminine hygiene products.

The proposed HST will include a partial rebate of the provincial portion of the single sales tax for new housing to ensure that new homes up to $400,000 will bear no more tax than under the current PST system, while homes above $400,000 will receive a flat rebate of about $20,000.


From this source
The government also announced that a refundable B.C. HST Credit will be paid quarterly with the GST and carbon tax credit to offset the impact of the tax on those with low incomes.

Restaurant meals will now be subject to a 12 per cent sales tax, instead of five, something that concerns the industry. However. Hansen said the price of restaurant meals could go down, as all business owners will be able to get a rebate of all the "input" tax they pay on their goods, something they have not been able to do with the PST. Overall, the implementation of the HST is expected to save B.C. businesses about $2 billion.
He also defended the higher tax on new homes, stating that 78 per cent of new home buyers in the Greater Vancouver area buy condos, and the price of most of them is under $400,000. Through rebates, the tax on these homes will be no higher than it is under the current GST.
The government likes the HST because it will reduce costs for businesses, and simplifies the paperwork required of business people. It believes this will serve to stimulate the economy and create jobs and investment.
Hansen said that was a major reason why B.C. wanted to harmonize at this time — to offer an equally attractive investment climate as will be available in Ontario.
-By Frank Bucholtz, Langley Times

#16 VicHockeyFan

VicHockeyFan

    Super Moderator

  • Moderator
  • 20,123 posts

Posted 23 July 2009 - 05:42 PM

all business owners will be able to get a rebate of all the "input" tax they pay on their goods, something they have not been able to do with the PST. Overall, the implementation of the HST is expected to save B.C. businesses about $2 billion.


Restaurant owners don't pay any PST now on their main purchase, food. So getting a rebate on the tax they pay for menus, equipment, cleaning supplies, napkins etc. is no big deal.

#17 sebberry

sebberry

    Super Moderator

  • Moderator
  • 9,810 posts
  • LocationVictoria

Posted 23 July 2009 - 05:46 PM

And tourists, consumers, etc... will still see the 12% tax on restaurant food. Doesn't matter if the cost of the dish drops by a buck or two.. the perception will remain that the tax is excessive.

#18 sebberry

sebberry

    Super Moderator

  • Moderator
  • 9,810 posts
  • LocationVictoria

Posted 23 July 2009 - 05:48 PM

He also defended the higher tax on new homes, stating that 78 per cent of new home buyers in the Greater Vancouver area buy condos, and the price of most of them is under $400,000. Through rebates, the tax on these homes will be no higher than it is under the current GST.


With the hyper inflated lower mainland and Vancouver island house prices, expect to see that 78% number climb past 85%.

This tax means I will probably never get to buy a house :mad:

#19 Roger

Roger
  • Member
  • 284 posts

Posted 23 July 2009 - 06:15 PM

And tourists, consumers, etc... will still see the 12% tax on restaurant food. Doesn't matter if the cost of the dish drops by a buck or two.. the perception will remain that the tax is excessive.


Have you ever seen a restaurant lower their prices? They will keep prices the same and hope to weather the storm. When volume drops off they will be unable to lower them and still make a profit. The net result will be fewer patrons. (Kinda like BC Ferries raising the fuel surcharge and then wondering why ridership is down.)

You can also expect smaller tips for serving staff. Patrons will see the 12% tax number on the bill and some will leave the same amount for the tip. Some will do this to offset the increased total cost; others will do it because they figure the 12% tax number is close enough to 15% and they don't need to do any math.

And then we have the American tourist that is seeing very little exchange difference (1.07 today at currency exchange) and now sees this big HST tax as one item their hotel and restaurant bills. Then they fill up with gas and shake their heads again. Will they keep coming back? What will they tell their friends when they go home?

#20 Linear Thinker

Linear Thinker
  • Member
  • 230 posts

Posted 23 July 2009 - 06:15 PM

My wife works in the PST policy area.
I know one family who will NOT be stimulating the economy anytime soon!

thanks Gordo

You're not quite at the end of this discussion topic!

Use the page links at the lower-left to go to the next page to read additional posts.
 



1 user(s) are reading this topic

0 members, 1 guests, 0 anonymous users