Tuesday, December 15, 2009

Harmony in B.C.? The implementation of the Harmonized Sales Tax (HST)

July 1, 2010 is rapidly approaching in British Columbia. While it will be a national holiday as it is every year, it is also the date that the province will implement the Harmonized Sales Tax (HST). The jury is still out on whether it will be good for the province or not.

The answer, at this point, depends solely on who is asked. There are clearly going to be winners and losers in this new tax. The decision to implement the new tax is final. The actual impact is still theoretical.

It seems that the majority of the B.C. business community is clearly in favour of the HST. With 130 jurisdictions around the world using an HST style tax, B.C. simply cannot ignore joining the fray, if it wishes to compete for business investment. The province must offer the same tax advantages to the business community, lest businesses move elsewhere to obtain the benefits. Similarly, with e-commerce on the rise, retailers and manufacturers are competing with provinces like Ontario, which voted to adopt the HST.

A major challenge lies with the hospitality industry and other business sectors that currently don't have to charge PST, or services that don't have to charge GST. Under the new HST, these businesses and services will have no way getting back the HST. In essence, here will be the new tax burden with no relief in sight. Also, the average consumer will pay more taxes. Consumers cannot claim any portion of the HST but will pay more for products and services that are currently tax exempt but will not be so under the new HST.

Economists claim that implementing the HST is the right move for B.C. Come July 2010, B.C. will see if the economists are correct.

Incorporate in Canada with CorporationCentre.ca
Click. You're incorporated ®