The Government Announces the New BC HST
How Will the Proposed 12% Value-Added Tax Impact BC Consumers?
Jul 28, 2009
The government revealed on July 23, 2009 its plan to combine the BC Social Services Tax (PST) with the federal Goods and Services Tax (GST) into a Harmonized Sales Tax (HST) of 12%. This statement came four months after Ontario announced a similar plan.
While the new HST will provide some benefits for businesses, including eliminating tax on business inputs, it will not have a similar effect on consumers in general.
How Will Consumers Be Affected by the HST?
Most goods and services will be subject to HST in the same manner as they are subject to GST.
The biggest change for consumers will come from the fact that the new tax will apply to goods and services that were previously PST exempt. For example: getting a haircut, buying non-prescription medication, or buying school supplies.
Point of sale rebates will be introduced for the provincial portion (7%) of the BC HST for a limited number of items, such as books, children’s clothing and footwear, children’s car seats and booster seats, diapers, basic groceries, gasoline, diesel fuel, and aviation fuel for motor vehicles, boats and aircraft.
The new HST will apply to new home sales over $400,000. The government’s intent as of now is to keep new home sales that are up to $400,000 subject to current taxes only. However, if HST applies, new home buyers will be able to claim a rebate equal to 5% of the purchase price up to a maximum of $20,000.
Resale homes will not be subject to the HST.
HST Credits for Low Income Individuals and Families
In order to protect low income individuals and families, a BC HST credit of $230 per family member for individuals with income of up to $20,000 and families with incomes up to $25,000 will be paid quarterly with the GST and carbon tax credits.
More details regarding the BC HST will be released by the government in the coming months. In the meantime, consumers and businesses alike are left wondering how this will impact them, especially in the current economy.
Since the HST is expected to help businesses save money by allowing them to deduct the tax they pay on inputs, the government hopes that some of those savings will be passed on to consumers. However, that is at the discretion of those businesses.
So far, over 130 countries in the world, and four other provinces in Canada, have implemented value-added taxes, so BC is simply catching up to the rest of the world.
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