HST has been on the radar for those of us who live in Ontario and British Columbia here in Canada. For those wondering HST is VAT. A couple years ago there were two types of tax in BC and Ontario – GST (Goods & Services Tax, which is a VAT) and PST (which is a consumption tax, and consumption taxes are different from VAT though to the average person they make no difference). HST has existed in the Maritime Provinces (except for PEI) since the mid-1990s, and from a business perspective it’s much easier to deal with HST than two different tax systems. It means greater efficiencies for business (and most businesses in Canada are small mom&pop type things like mechanic garages, dry cleaners, variety stores etc) and streamlines the collection & auditing activities of the Tax Authorities.
Ontario switched over to HST approximately at the same time that BC did, in mid 2010. There were calls in Ontario to repeal it, mostly because it has been applied, except for a small number of exceptions, to virtually all goods & services sold/offered in Ontario. This includes costs for home heating, which irks a lot of people as the provincial portion (PST) was never part of the cost, only the Federal (GST). So instead of paying 5% in tax you pay 13%. To help ease the transition the Federal Government made multi-billion dollar payments to the provinces (Ontario & BC) to setup the new systems, transition auditors from the provincial Ministry of Revenue to the federal Canada Revenue Agency, as well as make transitional payments to citizens to ease them onto the new tax system.
Ontario has not gone back. There has been grumbling back when it was being discussed and there are still some grumbles, but for the most part it is here to stay. Am I delighted with it? Yes and no. Yes, because it makes my job sooooo much easier when I have to prepare my monthly remittances which used to take me 2 days and takes just a couple hours now. As well, with regards to the billing & payables functions it is so much easier as well (I’ll blog later about how PST is painful for companies). I hate it cos some of my costs have gone up, yes, but not in any seriously significant fashion. And I am well aware of the legislation that was put in place and what the financial ramifications are for Ontario if we back out of the HST — billions needing to be paid back to the Federal Government.
Now in British Columbia there is a different story. BCers hated the HST so much there was a push for a referendum. The NO side won and now BC is working on dismantling the HST in that province. Here is the FAQ offered to people in BC who were wondering about how to repeal the HST. What the FAQ doesn’t tell you, and I wonder if this was brought up during the referendum campaigning, is that BC has to repay the funds given it by the Federal Government for the HST transition. I recently saw an article in Maclean’s that the BC Premier, Christy Clark has asked for a credit for “time served” as BC will be with the HST until about mid 2013 before it is completely dismantled in the province.
Was it communicated to BC residents that there is a price to be paid to reverse the HST? I don’t see it in the FAQ provided by the “No to HST Campaign”.
There are costs in trying to revert back to BC PST – rehiring of auditors/staff in the Ministry of Finance, repaying the Federal Government, businesses having to shell out $$ again to reprogramme their accounting systems & POS (point of sale) systems.
shihtzustaff said:
I am one of those British Columbians who voted to axe the tax. I get why the HST is better. However, the majority of BCers completely objected to how the tax was foisted upon us. We had an election in May of 2009 and in July 2009 the BC Liberals brought the HST in. Even after the Gov. had said they had no plans to bring in the HST.
They lied and it pissed us off completely. We were told we would have to pay back the 1.6 billion that had been given to us in transition payments. We simply did not care.
The other thing that really pissed me off was that we were continually told that the HST created jobs yet no one could satisfactorily explain why. And I looked for information!
The other fatal error the BC Liberals (which are Conservative by the way) made is that they tried to bribe us with our own money. They proposed a one time $175 payment to low income families and seniors. They further promised a 2 point reduction in the tax by the end of 2014. Of course all of these things only came into play if we decided to keep the tax.
I also don’t buy that it is going to be a huge undertaking to go back. The majority of small businesses already know how to collect the PST and how to report it to government. I am also quite sure that the staff can be hired back from CRA.
I can’t wait for the PST to return. The HST applied to so many more things.
Really, the whole thing is a big, smelly pile of shit.
opinionatedbean said:
All those PST Auditor employees now work for CRA, it is impossible to transition them back as they now work for a Federal Agency — not sure how it was done in BC but in Ontario they were all given “packages” cos they were effectively laid-off by the Provincial authorities. So hiring a whole slew of new auditors, employees and whatnot. And I seriously doubt the Feds will grant the BC Premier a credit for “time served”.
PST is a very time-costly endeavour to do, cos it isn’t treated like GST/HST where you have “input-tax-credits” .. in many cases you have to do self-assessments cos a vendor hasn’t charged you the PST but the Ministry of Finance still wants their monies and they don’t care who pays for it. It’s also a cumulative tax – vendor charges $8 in PST, this gets added to the cost, then shop charges $8+tax on the original PST charge. It’s not a pretty tax, and the rules governing it are just painful.