Published Articles

HST from Three Perspectives (in Business Examiner)

There have been many questions swirling around about the proposed Harmonized Sales Tax (HST), and I’m sure that there will be many more to come. The introduction of HST will represent the single largest tax change in our province in a very long time. Our Chamber is working hard to get as much information out to members as possible, as we understand it, and to determine how HST will impact on businesses in our region.

In analyzing the impact of HST, we look at it from three perspectives. How will HST affect the economy? How will HST affect businesses in different sectors? How will HST affect the consumer? So far this is what we think we know.

Many economists will agree that HST is a great move for the economy, from a fiscal policy perspective. Our current tax system is onerous and limits how competitive we can be from an international or even national perspective. In fact, the BC Progress Board stated that introducing a harmonized sales tax would do more to stimulate investment in our economy that completely doing away with BC’s general corporate income tax. Economically for our province, this is a good move.

How is it for different business sectors? There’s more variety in that answer – for some businesses it is only positive and for some, the positive effects are not as easily apparent. In general terms, if your company sells business to business, the HST costs will be charged to your clients, but those clients will most likely claim them back in input tax credits (ITCs), so the increase is just a flow through transaction. If you sell business to consumer, your customer will not be able to claim an ITC so the increase in your service tax is simply passed on. If however, you sell retail product, your customer already pays 12% combined GST/PST and will see no cost increase at the til, while you will see savings through higher ITCs and lower administration costs. Businesses can analyze their savings and determine whether they can pass those savings on to their customers.

The consumer will see a change on the items they purchase. The degree to which your purchases are affected may depend on  whether you consume more or less of the items that are currently not subject to PST (and now will have a 7% tax increase) or whether your purchasing pattern is one that consumes more product that is already to subject to 12% tax through GST and PST combined.

Clearly there is much more to understand and the Chamber is engaged with all of the sectors in the community to find the impact of HST on our region. We will continue to follow this issue and assist our business community in getting the information they need.

Articles - 2010

Articles - 2009