Harmonized Sales Tax and Sleds!

[BC Sno-Ghost]

Sounds as though this new HST is going to apply to registering sleds. It is also going to apply to "private" used car or truck purchases Used to be you only paid the 7% pst on sleds and used vehicles purchased privately. Now it looks like when you register a sled in your name you will be paying 12%.(GST and PST combined) $5000 sled used to mean $350 in tax, Now $600. Any sleds you need to register? Do it now!

 

[sledderdoc]

Sounds as though this new HST is going to apply to registering sleds. It is also going to apply to "private" used car or truck purchases Used to be you only paid the 7% pst on sleds and used vehicles purchased privately. Now it looks like when you register a sled in your name you will be paying 12%.(GST and PST combined) $5000 sled used to mean $350 in tax, Now $600. Any sleds you need to register? Do it now!

Almost makes one wish you lived in Alberta!! :d

 

[glengine]

Almost makes one wish you lived in Alberta!! :d

To bad that the HST is a canada wide tax that is done by the federal goverment. So to my knowledge so far it will be applied to alberta as it is a new federal goverment thing. If someone knows otherwise for sure please let me know.

 

[sledderdoc]

To bad that the HST is a canada wide tax that is done by the federal goverment. So to my knowledge so far it will be applied to alberta as it is a new federal goverment thing. If someone knows otherwise for sure please let me know.

It is however since Alberta just has the GST we will continue along as usual. We are the only province not effected! :d

 

[BC Sno-Ghost]

Almost makes one wish you lived in Alberta!! :d

You're kidding right? I used to live in Edmonton...nice place to be from.:d I'd pay a ton of taxes to stay in BC...hey wait I am

 

[BC Sno-Ghost]

It is however since Alberta just has the GST we will continue along as usual. We are the only province not effected! :d

"Not affected" for now Believe me it is coming to Alberta...

 

[JaySimon]

HST is pretty much the worst. So much for keeping money in the blue collar workers pocket.

Gordon Campbell is a clown.

 

[RETODD]

Read the Facts:


The impending Harmonized Sales Tax has been portrayed as a huge tax grab by the British Columbia government and a major windfall for business. It has also been critiqued as a new tax burden on consumers, harsh on specific sectors, and unfair to lower income families. In short, the HST is seen by critics as a detrimental change from a known, workable sales tax.

This characterization of the HST is reminiscent of the arguments and fears that surrounded the GST's introduction in 1991 to replace the federal manufacturers' sales tax. In fact, the economic policy issues of the HST are identical to those underlying the GST, and each of these critiques of the HST is as groundless as those associated with the GST.

Understanding the HST's mechanics may help to allay the fears and misconceptions. In essence, harmonizing B.C.'s sales tax will replace a hidden tax on consumers -- collected from business but passed along in higher selling prices -- with a much more direct and visible tax on consumers. Although political rhetoric may inflame people to think they are paying more, in reality they will simply be paying the hidden part of the tax in a more visible way.

Additionally, the HST will simplify tax administration and collection. In mid-2010 the HST will replace both the seven-per-cent B.C. retail sales tax and the five-per-cent federal GST. The two taxes will be collected jointly at a total rate of 12 per cent, and with few exceptions both components will apply to the same goods and services.

Businesses now pay $1.9 billion of the total $5 billion collected annually in B.C. sales tax. Under the HST, businesses will get rebates for the sales tax they pay on purchases of inputs including capital goods and materials. HST skeptics question whether eliminating the taxes on business will be translated into lower prices for consumers.

Several pieces of evidence support the pro-harmonization position that reduced business taxes will flow through to consumers. Following the GST's introduction, consumer prices declined, particularly for items bearing the highest levels of the previous federal sales tax. The three Atlantic provinces that harmonized their sales taxes in 1997 also witnessed reduced consumer prices. And when France sharply cut its GST-type tax on home repairs in 1999, over 75 per cent of the tax cut flowed to consumers within four months.

To understand why the HST does not represent a new tax burden on B.C. consumers or a major tax windfall for business, further details on its operation are useful.

Clearly the HST will collect more taxes directly from consumers, since the B.C. portion of the HST will remain at the current seven-per-cent rate but will apply to more goods and services. However, the hidden sales taxes embedded in consumer prices, which now raise effective tax rates above the visible rate, will vanish with harmonization.

This account explains why the HST does not represent a new tax burden on B.C. consumers. The competitive forces that will decrease product prices with removal of the sales tax from business also explain why the HST will not be a major windfall for business. Exporting firms that sell their output at world prices will gain tax relief not offset by price cuts, but this will induce them to invest and expand their workforce.

Business savings from no longer having to comply simultaneously with two separate, complex sales tax systems will provide further impetus for reduced consumer prices.

This account further explains why the HST overall is not a major tax grab by the provincial government. The additional taxes collected directly from consumers will be offset by the loss of $1.9 billion now collected from businesses. Moreover, the province will forgo another half billion in its new HST rebates for new home purchasers.

Taxpayers will also gain from harmonization. The B.C. government will save $30 million annually by disbanding its sales tax collection bureaucracy, money better spent on valued public services. And B.C. taxpayers will gain further from the $1.6 billion in federal transfers to ease transition to the HST.

Business has generally been supportive of the HST, but two industry sectors have been vocal critics: Restaurants/hospitality and residential construction. Both are currently insulated from the full seven-per-cent B.C. sales tax: The former sector being exempt, the latter sector bearing tax on construction materials but not on land or on-site labour.

No doubt B.C.'s restaurant industry will survive the HST transition. Ontario already imposes its eight-per-cent sales tax on out-of-home meals, and its restaurants are no less buoyant than B.C.'s. The housing sector will be cushioned by new rebates that offset the full HST impact on moderate-priced homes and part of the impact on higher-priced homes.

HST critics further warn that the reform will unduly burden the poor, but this fear is unfounded. Like the GST that it mimics, the HST will not be applied to basic foodstuffs or residential rents -- the largest components in poorer households' budgets. HST rebates to food processors, distributors, and retailers should lead to reduced grocery prices.

Additionally, the province will provide refundable tax credits to low- and moderate-income households similar to the existing GST tax credits. Claiming B.C.'s HST credits will entail no extra paperwork and the two credits will be paid jointly based on the taxfiler's income. Many poor people will actually come out ahead from the HST reform.

Why would the B.C. government pursue harmonization despite the predictable public and political reaction, again mirroring the GST experience? What could justify this politically hazardous course for tax policy?

In harmonizing its sales tax with the GST, B.C. will reap substantial economic benefits that, hopefully, will supersede the political costs. Harmonization will reduce the cost of capital goods, thereby spurring business investment, increasing jobs, and raising workers' real earnings over the long run. It will reduce distortions across the economy -- in which some items pay the retail sales tax multiple times as they move from one stage of production to another -- yielding greater efficiency.

Harmonization will make B.C. businesses more competitive both within Canada and in export markets, further augmenting investment and job creation. With Ontario harmonizing its sales tax in mid-2010, more than 90 per cent of the Canadian economy outside B.C. would be operating without the impediment of retail sales taxes, so B.C. could hardly stand still.

Political temerity is not a good reason for B.C. to maintain an antiquated sales tax system that impedes the economy's efficiency and growth. British Columbians should shed their fears and misconceptions over the HST so that they can reap the benefits of a modern, efficient, and growth-oriented tax system.

Jon Kesselman holds the Canada Research Chair in Public Finance with the Graduate Public Policy Program at Simon Fraser University.
© Copyright (c) The Vancouver Sun

 

[Summiteer]

Don't tell me the truth!!!

 

[BC Sno-Ghost]

They can call it whatever they want or attempt to justify its existence with BS line after BS line. It's a "Tax Grab". Nothing more. To think this is happening for the good of the Canadian Consumer is Crap! Bottom line is I'm now paying more tax...period. Remember when they said the Coquihalla Hwy would only have a toll until the cost of building the hiway was recovered....... that hiway was paid for 20 times over or more. Where did that money go?