HST Tax Increase 5% --> 12%

[WarrenC12]

Originally Posted by ravman

DONT BLAME ME....

I VOTE NDP

Ya.. no NDPee response yet either, since they are still busy taking ECON 101.

[metroXpress]

Liberals sing different tune on HST after Ottawa dangles carrot

Province to get $1.6 billion in transition funds

By Vaughn Palmer, Vancouver SunJuly 24, 2009



When the B.C. Liberals were asked during the recent election campaign if they had any plans to combine the provincial sales tax with its federal goods-and-services counterpart, they responded with an artful denial.

"A harmonized goods and services tax is not something that is contemplated in the B.C. Liberal election platform," was the governing party's identically worded reply to both the Greater Vancouver Homebuilders' Association and the Restaurant and Food Services Association.

Note how they stopped well short of read-our-lips opposition to a harmonized GST.

The Liberals weren't saying it was the furthest thing from their minds. Only that they hadn't mentioned the possibility one way or another in their election platform.

The ruse worked until election day. But as soon as the campaign was over, provincial officials began talking harmonization with their federal counterparts, resulting in the deal announced Thursday.

B.C. will move to a 12-per-cent sales tax effective next July, combining the seven-per-cent provincial sales tax (PST) with the five-per-cent federal goods and services tax (GST). The HST, they're calling it and some observers will wonder if the first letter stands for "higher" as opposed to "harmonized."

Critics were quick to point out the downside of the move, with arguments the Liberals themselves had made until recently. The combination will better than double the tax bite on a lengthy list of currently PST-exempt goods and services, from restaurant meals to haircuts to (is nothing sacred?) newspapers.

Overall it means higher up-front prices for consumers, tourists, homeowners and pretty much everyone in B.C. If not from cradle (diapers would be subject to a seven-per-cent rebate) at least to grave (funeral services lose their current PST exemption.)

Asked to account for the sudden reversal of position -- less than three months ago the Liberals insisted they had "no plans to formally engage the federal government in discussions about potential harmonization" -- Finance Minister Colin Hansen offered multiple rationalizations.

The province of Ontario had already announced the changeover. The federal government was offering financial inducements for provinces to climb aboard the single-tax bandwagon. Ottawa insisted B.C. had to act now or there wouldn't be time to incorporate all the necessary changes by next summer.

"B.C. cannot be left behind," said Hansen. Other reputed benefits include reduced administrative costs for the two governments, less paperwork for business, and the better investment climate that ought to emerge from a more integrated national tax system, and so on.

But those advantages have long been pitched by advocates of sales tax harmonization, only to be dismissed outright by a succession of B.C. Liberal ministers. Former finance minister Carole Taylor: "Not on my watch." Former revenue minister Rick Thorpe: "Not on our agenda."

What's changed (other than the retirement of Taylor and Thorpe) is the B.C. Liberal government's own room to move on fiscal matters.

So long as the government was balancing its budgets, B.C. could afford to go its own way on tax policy.

Slumping revenues, combined with rising spending pressures, means that the province could no longer turn up its nose when the feds dangled a financial inducement for sought-after policy changes.

In recognition of the benefits to the Canadian economy of an emerging national sales tax regimen, Ottawa established a formula to provide transition money to provinces that agreed to harmonize. In B.C.'s case, it works out to $1.6 billion, which the province will be free to spend any way that it sees fit.

Just the thing for a government that was recently forced to admit it can't possibly hit a promised $495-million deficit target amid demands for hundreds of millions of dollars worth of additional spending on health care and other programs.

"It will help with our fiscal challenges," Premier Gordon Campbell admitted. "We don't have to take it all at once," added an obviously relieved Hansen.

Both insisted that the province won't realize any additional revenues from its share of the combined tax. Any new revenues will be offset by credits, exemptions and other changes to ensure no net increase in overall provincial sales taxes.

Individuals won't be hit as hard as they might think either, they argued. A share of current sales taxes is hidden in prices. The harmonized tax has the singular advantage of putting everything up front.

Still, Hansen concedes he is facing a "hard sell" in persuading British Columbians to accept a hefty jump in an already unpopular tax with no obvious payback to the consumer. "There will be a lot of people taking pot shots at this," he forecast.

Perhaps that is why the minister and the premier held off saying precisely how they would make use of that $1.6 billion transition money. Maybe to maintain programs. Maybe to reduce the deficit.

Or they might take the lead from the Ontario government, which has been using the transition money to cushion the financial blow for consumers and provide direct cash rebates of up to $1,000 to provincial taxpayers.

vpalmer@shawlink.ca

- - -

Read Vaughn Palmer's blog at vancouversun.com/palmer
© Copyright (c) The Vancouver Sun

http://www.vancouversun.com/news/Lib...652/story.html

[sacrifice333]

I'm certainly not a fan of any increase in sales taxes, but I would absolutely not be in favour of a consumer rebate, other than maybe for the lowest tax bracket.

Use the $1.6B to eliminate the deficit of this year and next and maybe use a bit to pay down our provincial debt.

[GeeCee]

Definitely not a fan.. unless the 1.6B goes to Translink.

[jlousa]

Warren the HST will be administered via the current GST system, so anything that only had PST now is tax free, the only example that pops into my head is used cars, but I'm sure there is more. There was an article listing a bunch of items online yesterday should've linked it then.

[twoNeurons]

At the very least, make the HST 10% and build it into the prices like they do in normal countries.

What people don't see they don't complain (as much) about.

As for me, call me cheap, I don't care. I'll be tipping less.

[NetMapel]

Originally Posted by sacrifice333

I'm certainly not a fan of any increase in sales taxes, but I would absolutely not be in favour of a consumer rebate, other than maybe for the lowest tax bracket.

Use the $1.6B to eliminate the deficit of this year and next and maybe use a bit to pay down our provincial debt.

I absolutely agree with paying down debt should be the priority. In fact, I think it is the number one priority as it cuts down on interest expense. Whatever additional money we get from new revenue sources should be used to pay off debt as fast as possible. Millions and billions of dollars of debt equates to a huge amount of interest expense that doesn't do any of us any good. This will cause us temporary pain for a short term but it will help our financial situation greatly and promptly.

[twoNeurons]

I always wonder what interest actually costs us per year.

[mrjauk]

Originally Posted by NetMapel

I absolutely agree with paying down debt should be the priority. In fact, I think it is the number one priority as it cuts down on interest expense. Whatever additional money we get from new revenue sources should be used to pay off debt as fast as possible. Millions and billions of dollars of debt equates to a huge amount of interest expense that doesn't do any of us any good. This will cause us temporary pain for a short term but it will help our financial situation greatly and promptly.

I don't think it's that simple. It depends on the level of interest expenses (determined by interest rates) and growth and inflation projections (although interest rates are correlated with inflation expectations).

[WarrenC12]

Originally Posted by twoNeurons

I always wonder what interest actually costs us per year.

The government's website mentioned 5 cents of every dollar go to interest on the debt. On a budget of $38.5 billion that's almost $2b. This could go up a lot if interest rates rise.

[DKaz]

Join the NO BC HST Facebook group. The group has more than doubled from just over 2,000 yesterday to 4,192 as of 10:58am today.

http://www.facebook.com/group.php?gid=105998706732

[Volksboi]

Yes, great idea guys tip the people making 8 bucks an hour less.... Because its clearly there fault that we will have to pay more taxes.. If you even think you need to tip less for the same great service, then do us all a favor and stay at home and dont take up a seat for someone whos not cheap and pathetic....

Cheers

[teriyaki]

What happened to the plan to eliminate the tipping system from Canada by 2010/2011 or something?

[MasterG]

THis is crazy, come on BC, you got a great province. But us Alberta folk are having a hard enough time with the PST before, now its on meals too? jeez, you guys need to find some more oil or something, help the government out with its need for ever-increasing revenues, without increasing taxes

BTW, going to Vancouver in 2 weeks, very excited, what a beautiful place. even if it cost a little extra .

When does this tax come into effect anyways?

[GeeCee]

Originally Posted by MasterG

When does this tax come into effect anyways?

July 1st, 2010

Originally Posted by teriyaki

What happened to the plan to eliminate the tipping system from Canada by 2010/2011 or something?

What are you talking about?

[quobobo]

Originally Posted by teriyaki

What happened to the plan to eliminate the tipping system from Canada by 2010/2011 or something?

I'm with GeeCee... WTF?

[DKaz]

There is no "tipping system" there's no law or legislation or anything like that, it's just embedded into Canadian culture, you know just like when you're on a freeway you let one car in on an onramp to be courteous (doesn't apply to Albertans).

[metroXpress]

Keep in mind that this harmonized sales tax doesn't affect only food...but also:

New HST taxes meals, new homes and haircuts


New homes are just one of the items that will be taxed more when B.C. adopts the HST next year. (CBC)

B.C. consumers will soon be paying much more tax on items that were previously exempt from the provincial sales tax, including big-ticket items like real estate, as part of the new harmonized sales tax.

Premier Gordon Campbell announced Thursday that the new sales tax, which will combine the five per cent GST and the seven per cent PST into a single 12 per cent levy called the HST, will take effect in July 2010.

Under the new tax, consumers will pay a levy equivalent to the GST plus PST on restaurant meals, airline tickets, funerals and haircuts — all items that were previously exempt from the PST.
New tax hit on real estate

But the biggest tax hit could be on those who buy new homes, which were previously exempt from the PST but not the GST.

The province will offer partial rebates of five per cent to a maximum of $20,000 on new homes. But someone buying a new $800,000 home — roughly the average price for new house in Vancouver — will still pay an extra $36,000 in tax under that formula.

Vancouver realtor Tom Everett said the additional cost will cripple a market that had been recovering.

"They have absolutely lost their minds if they expect people to pay that sort of a tax. I don't understand why on earth the government would do that to the housing economy, seeing as housing is one of the staples of a healthy economy, as you can attest to by checking out what's happening in the U.S.," Everett said.

The provincial government insists the majority of new homeowners won't see a difference in prices when they buy a home under $400,000, because of another PST rebate program for builders. But critics note there is nothing to ensure those rebates are passed on to consumers.
No consultation: NDP

Meanwhile, the B.C. New Democrats have accused the Liberal government of bringing in the new tax without consulting with affected groups such as the tourism and restaurant industries.

Campbell and his party even dismissed the idea of a harmonized sales tax during the recent provincial election, according to NDP finance critic Bruce Ralston.

“This sudden reversal caught consumers and many small businesses by surprise. During the campaign, the B.C. Liberals said they were opposed to the HST,” Ralston said in a statement released Friday morning.

The NDP estimated the new tax could cost the average restaurant $50,000 a year in lost sales.

A number of items will still be exempt from the PST portion of the new tax: gasoline and diesel fuel for vehicles, books, children’s clothing and footwear, children’s car seats and car booster seats, diapers and feminine hygiene products.


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http://www.cbc.ca/canada/british-col...st-prices.html

[twoNeurons]

Originally Posted by Allen

Keep in mind that this harmonized sales tax doesn't affect only food...but also:

It affects everything.

I don't think they're claiming this tax is revenue neutral. AT least, I haven't heard that.

To do that, they'd probably have to lower the PST to 3 or 4%. (I'd like to see 5%)

When the GST came into effect, it replaced a few taxes. One of them was a hidden Manufacturer's tax, which I think was at 11%. The consumers never saw it, and didn't care about it.

The GST also applied to services, so they lowered the rate.

Why not do the same for the PST?

SERIOUSLY, reduce it to 5% and make it included in the price.

Wouldn't it be nice to see a price on a tag and that be how much you paid?