OSOYOOS TIMES-July 29, 2009

By Laurena Weninger - Osoyoos Times

It might not look logical to mathematicians, but in B.C. if you add GST and PST you get HST and it’s a change in the provincial tax structure that South Okanagan Chamber of Commerce president Kenn Oldfield isn’t so sure of yet.
“Maybe from a book-keeping point of view it will make our lives easier,” he said.
The province announced on July 23 that it intends to harmonize the provincial sales tax (PST) with the federal Goods and Services Tax (GST), effective July 1, 2010.
Oldfield said he hasn’t had enough time to study what the harmonization of the taxes will mean and what direct effect they will have on him as a business owner.
John Winter, president of the B.C. Chamber of Commerce, is all in favour of the change.
“Harmonization of BC’s sales tax with the federal GST is one of the most important policy directions we can put in place today to position us for a strong recovery at the end of our current economic difficulties,” he said. “Small businesses across the province are supportive… because not only is this good news economically, this is particularly good news for small business.
“Small businesses are the tax collectors for government so this measure will remove the need for small business to deal with an unreasonable and complicated tax. This will allow us to focus on growing our businesses and creating jobs.”
According to a provincial media release, B.C. will have the lowest Harmonized Sales Tax (HST) in Canada, by combining the seven per cent PST with the five per cent GST, for a combined sales tax rate of 12 per cent.
All other provinces with an HST, and the harmonized tax proposed by Ontario, have a rate of 13 per cent.
“It’s estimated the HST will remove over $2 billion in costs for B.C. businesses,” states the release. “That includes an estimated $1.9 billion of sales tax removed from business inputs, which enhances competitiveness, increases investment and productivity and, ultimately, increases prosperity.”
Oldfield said that a harmonized reporting system would certainly make life easier.
“Anything that saves me money – and simplifies – is a good thing.”
Glenn Mandziuk, chief executive officer of Destination Osoyoos, said he agreed that a harmonized tax may streamline taxation processes for businesses.
But he added it’s “too early to tell” what the HST will mean for the tourism and hospitality industry.
Some red flags have already gone up in the tourism sector with respect to “travel trade” as some vacation packages currently being offered could cost more under the new taxation scheme, Mandziuk said.
He also said he hopes that since some goods and services will cost more when the HST comes into effect, businesses will pass along any savings they enjoy on to consumers.
An education process on what the HST will mean for businesses and consumers will need to begin soon, Mandziuk said, and Destination Osoyoos will have to tie such education into its local business training.
Similar to PST exemptions, the B.C. HST will provide consumers with point-of-sale rebates on the seven per cent provincial portion of the HST on products including gasoline and diesel fuel for vehicles, books, children’s-sized clothing and footwear, children’s car seats and car booster seats, diapers and feminine hygiene products.
According to a media release from KPMG, an accounting company, buyers will be able to claim a rebate of part of the provincial portion of the HST for new homes up to $400,000.
The rebate rate has not yet been announced, the release states, but the province’s intent is to ensure that new homes up to $400,000 will bear no more tax than they currently do. New homes that cost more than $400,000 will be eligible for a flat rebate of approximately $20,000.
“At this point, our provincial organization is working on calculating the impact of the new tax,” said Louise Baier, executive officer for the South Okanagan Real Estate Board. She said the B.C. Real Estate Association will hopefully have a statement ready next week regarding the harmonization.
The federal government will provide B.C. with $1.6 billion in transitional funding in recognition of the improvement this change will make to business competitiveness in Canada.
The full cost of administration will be borne by the federal government, saving the province an estimated $30 million annually in administration costs.
More than 130 countries, along with four Canadian provinces, have adopted taxes similar to the HST, called value-added taxes, which reimburse most businesses for the tax they pay on their inputs.
Ontario will also move to a single, value-added sales tax on July 1, 2010. With B.C., six of Canada’s 10 provinces will have a similar sales tax by July 1, 2010.
reporter@osoyoostimes.com