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.