Goodbye PST. So long GST. Hello HST.
British Columbia is merging its provincial sales tax (PST) with the federal goods and services tax (GST) to create a single 12 per cent harmonized sales tax (HST).
Critics, however, warn that HST could raise the price of dozens of services — like the price of a restaurant meal — that are currently exempt from PST.
Premier Gordon Campbell said Thursday that the harmonized tax would make business more competitive, attract billions in new investment while creating jobs and economic growth.
“It is a bold stroke for B.C.’s economy,” said Campbell Thursday in his Vancouver office, of the new tax that takes effect July 1, 2010.
The new harmonized tax follows the lead of three Maritime Provinces as well as Quebec and Ontario. The latter’s 13 per cent HST also begins July 1, 2010.
NDP finance critic Bruce Ralston warned in a statement Thursday that the provinces that have implemented HST saw price increases in everything from electrical and vet bills to eating in restaurants and getting a haircut.
The Canadian Restaurant and Foodservices Association said the HST could hurt tourism by increasing the tax on a restaurant meal from five to 12 per cent.
Under PST, exceptions cover a number of goods and services including all food products, safety equipment, professional and personal services (like haircuts).
The province said that businesses providing goods and services pay PST on their purchases and that cost is passed on to consumers through higher prices.
Moving to HST, should eliminate those hidden taxes and the savings should pass down to consumers.
HST also offers point-of-sale rebates on a number of products including books and children’s clothing as well as gasoline and diesel because they are already subject to the province’s carbon tax.
Finance Minister Colin Hansen said HST would save businesses almost $2 billion a year. The federal government is also handing the province a $1.6-billion payout to make it more attractive.