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Thread: Leaping back into the HST debate

  1. #1
    Dennis Lapierre
    Join Date
    Dec 2009
    Falkland, BC
    Blog Entries

    Leaping back into the HST debate

    The following was issued by the Province of BC. What are your views?

    April 5, 2011
    Ministry of Finance
    Fight HST report misleading

    On April 5, 2011, Fight HST released a report described as a comprehensive study on the
    problems with the harmonized sales tax in B.C., elsewhere in Canada and worldwide. The
    report contains a top 10 countdown with a number of inaccuracies and misleading conclusions.
    Here are some errors and the actual facts:

    10. HST hurts families, seniors and low-income people most:
    CLAIM: The HST is a regressive tax that forces middle- and lower-income people to pay a
    greater proportion of their income to acquire the same goods and services as those with higher
    incomes. The HST hurts poor people the most.
    FACT: Under the HST, there is a B.C. HST credit of up to $230 per person annually. Low- and
    modest-income individuals, seniors and families that receive the B.C. HST Credit actually are
    generally better off with harmonization due to the credit.

    9. HST is inflationary:
    CLAIM: To avoid a decrease in the standard of living, HST paid by consumers must be charged
    back to employers in the form of higher wages - ultimately wiping out any benefits to business.
    In Europe, the VAT started at about six per cent in most countries and has grown to as high as
    25 per cent in places like Denmark, Hungary and Sweden.
    FACT: The Bank of Canada, TD Economics and economists have all said that harmonization will
    likely lead to a small one-time increase in the Consumer Price Index. A recent report by
    economist Jonathan Kesselman on the HST in B.C. suggested that the overall impact of the HST
    on the prices paid by consumers is very modest. The VAT in Europe being higher has much
    more to do with their higher level of spending on social programs and there is no relationship
    to higher inflation levels in those countries.

    8. HST is economically counter-intuitive:
    CLAIM: B.C.’s big resource companies get most of their money from selling goods overseas and
    to the United States – which is new money coming in from consumers outside B.C. Exempting
    business from sales taxes means government is taking all of its sales tax revenues from
    consumers inside our economy, and then transferring $2 billion of it back to corporations
    mostly headquartered in Europe, Asia or the U.S. That doesn’t make economic sense. FACT: In a globally competitive market place, the HST improves the competitiveness of B.C.
    businesses relative to foreign firms. The PST puts our manufacturers and exporters at a distinct
    disadvantage due to increased costs of production. The more competitive our industries are on
    a cost basis, the more jobs and investment will follow. As a trade-based economy, these
    improvements are real and explain why economists have predicted more jobs and growth as a
    result of the HST.

    7. HST curbs consumption, reduces tax revenues and increases the tax burden:
    CLAIM: The HST in B.C. will take a total of $2 billion per year out of our economy – or an
    average of $400 more from every man, woman and child. Reduced consumption results in
    reduced government tax revenues. Governments must then either cut spending, increase debt,
    or raise taxes. Under the HST, they will end up doing all three.
    FACT: In fact, consumption has increased throughout 2010, as after the HST was introduced.
    Tax revenues are higher than forecast last year.

    6. HST drives the economy underground:
    CLAIM: In 2009, the Institute for Fiscal Studies produced a report that showed “leakage” from
    VAT evasion in the UK of between $20 billion and $30 billion per year. When the HST is evaded,
    the government loses twice – the HST not charged, and the income not reported.
    FACT: Alleging businesses will break the law and in the process give up the input tax credits
    they would otherwise be able to claim makes no business sense. Given where HST revenues
    currently are, there is no evidence of ‘leakage’.

    5. HST kills jobs and hurts the economy:
    CLAIM: The provinces with the highest unemployment - Newfoundland 12.4 per cent, Nova
    Scotia 9.5 per cent, New Brunswick 9.1 per cent, B.C. 8.2 per cent and Ontario 8.1per cent – all
    have the HST. The three provinces with the lowest unemployment – Manitoba five per cent,
    Saskatchewan 5.4 per cent and Alberta 5.9 per cent do not have HST. If the HST really
    stimulated growth – then corporate income taxes would increase to offset lost sales taxes so
    consumers would not have to pay more HST.
    FACT: Low unemployment rates in Alberta and Saskatchewan are primarily due to the booming
    resource sectors in those provinces (oil and gas, potash), not to the lack of an HST.

    4. HST is unnecessarily complicated:
    CLAIM: Under the HST, business accountants must track millions and millions of transactions
    and remittances, and file thousands of quarterly reports to government. But none of that is
    necessary. Simply exempting business from sales taxes would be a far simpler system than the
    cumbersome HST. FACT: The HST referendum, as determined by the HST petition, does not present another
    option for the PST system. The referendum will return B.C. to the PST as it was previously in
    place. In fact, the HST has simplified the tax system for businesses in British Columbia. B.C.
    businesses now only have to comply with one tax system instead of two, at an estimated
    savings of $150 million annually. In addition, most businesses were already familiar with the
    GST system.

    3. HST is revenue-neutral to the B.C. government:
    CLAIM: One of the biggest myths surrounding the HST is that it will help to pay for government
    services such as health care and education. But the HST is really a $2 billion tax transfer from
    the corporate sector to the consumer with no new revenues going to government.
    FACT: The HST is not revenue-neutral going forward. The HST leads to improved economic
    growth and it actually provides increased revenues to government in the years ahead, revenues
    that will go towards meeting the demands of increasing health care costs.

    2. HST is a loss of provincial sovereignty:
    CLAIM: The HST gives control of B.C.’s sales tax authority to the federal government. It turns
    B.C. into the equivalent of a giant municipality, awaiting transfers of our own money back from
    FACT: We can set our own tax rate, at 12 per cent the lowest in the country, select our own
    point-of-sale rebates such as the rebate for motor fuels, design our own B.C. HST credit for
    those with low and modest incomes, provide a new housing rebate and set the rebate
    percentages for school authorities, universities, public colleges, municipalities, hospital
    authorities, qualifying non-profit organizations and registered charities. B.C. retains the
    flexibility it requires in the tax system to respond fully to economic and social policy objectives.

  2. #2
    New Member
    Join Date
    Mar 2011

    Ah well, HST is here to stay. Let's not kid ourselves, there are too many things tied up with it right now. And I don't have a problem with it anyway. In the Netherlands the HST (overthere called BTW) is 19%, so what are we talking about here?
    What makes me more mad about it is the way it is shoved down our throats, that is a thing "they" should discuss. Maybe "they" should bring the former premier to court for lying or manipulating, that's what should be done. But that will never get done either, it's politics. And since there are no honest politicians there will never be such a thing as "redo" the HST. In my eyes (maybe shortsighted) all politicians are liars by default.

  3. #3
    Dennis Lapierre
    Join Date
    Dec 2009
    Falkland, BC
    Blog Entries

    The BCAC is very likely to be part of an initiative to strongly support the retention of the HST. I think everyone who farms realizes that it is a very good benefit for farmers and it would be a serious step backwards as far as the agriculture community is concerned if the referendum went the wrong way. Farmers gain an additional 5 or 6% tax savings through the HST, plus the savings apply to anything purchased for the farm, not just those things that are outlined in a schedule.

    I tested it. I bought a trail bike to get me around the farm a little easier and made an HST claim against it. No problem. Same with dog food for my guardian dogs. Things like that aren't covered under the old PST-GST system. These were both very good savings for me.

    What has been your experience with it?

  4. #4
    Dennis Lapierre
    Join Date
    Dec 2009
    Falkland, BC
    Blog Entries

    What Van der Zalm did NOT tell you about HST…..

    I'm adding this on behalf of an e-mail contributor. So far, while I'm getting only personal e-mail responses to the question, it would appear that while nobody is happy with the way the province went about putting this in place, which really says more about who was running the government than anything else, everyone sees the value of keeping it.

    Here's what the contributor sent me:

    · HST is fair to farmers. Food is supposed to be tax exempt in BC, but under PST farmers still paid PST on a lot of the costs to produce it. Under HST farmers get HST refunded on the input costs of farm production.
    · HST is efficient. We used to have 5% GST and 7% PST and two totally different government tax collection and audit bureaucracies to administer each program. Now we have one. And businesses have a simplified system to account for it.
    · HST is cheap. Apart from Alberta (with NO provincial sales tax and a huge GHG liability for the rest of us to pay), and Saskatchewan (with combined GST and PST of 10%) , our 12% HST puts BC at the LOWEST sales tax in Canada - along with Manitoba (5% GST plus 7% PST). Ontario, Newfoundland and New Brunswick have 13% HST, Quebec has 13.5% (5%+8.5%) Nova Scotia has 15% HST, PEI have 5%GST and 10% PST.
    · HST helps us be more competitive in export markets. Provincial sales tax should not be charged to produce goods sold outside the province. Under PST, farmers paid PST on some production costs, even when the produce was exported. Under HST, all the sales taxes on inputs are refunded.
    · HST is simple, transparent, and understandable. Under PST, retailers had to track and train sales staff to determine when PST was chargeable, and when it was exempt. Farmers had to have proof they were eligible and file claims to recover PST when it was charged incorrectly. The BC Government had to have a whole confusion of staff to decide what was PST exempt and what was not and under what conditions things were sometimes exempt but what other conditions when they were not and whether they liked the colour of your eyes today.

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