Doesn't Mean Harmony
to Premier Campbell next year you'll be paying 7% more for
a meal out, a haircut and hundreds of other things. "Wow,
that was not anticipated," wrote the president of the
Columbia Restaurant and Foodservices Association, a solid
supporter of the Campbell government. He received assurances
from the Minister of Small Business just last week that an
announcement on harmonization would require consideration
of all impacts before it could be contemplated.
of BC's sales tax (PST) with the federal goods and services
tax (GST) was not mentioned in February's budget and not one
word about it escaped the lips of Premier Campbell during
the recent election, yet only two months later, before the
August 25th sitting of the legislature, the tax
change was announced with an effective date of July 1,
26, Ontario announced that it would merge its sales tax with
the GST; also effective on July 1, 2010, the announcement
was part of a provincial budget tabled in the legislature
where such announcements should be made. Since Ontario's announcement
was made four months ago, British Columbians have the advantage
of being able to read what Ontarians have said about the tax
shift. According to a CBC
frequently asked questions column, "many items that
used to be exempt from sales tax will no longer be so."
It quotes the Ontario Real Estate Association as saying that
merging the taxes will add more than $2,000 to the cost of
a real estate transaction. That's just the tax on the agent's
fee; it doesn't cover what the tax does to increase home prices,
to be as much as $33,000 in the Toronto area. Even with
the $20,000 rebate promised by Campbell for purchasers of
homes priced over $400,000, the government will be pocketing
much more from new home buyers with its harmonized tax.
or "harmonizing" the PST with the GST means applying
the provincial tax to a broader tax base. PST does not apply
to most services, the exceptions being legal services and
repair services (fixing something that was originally taxed).
It also doesn't apply to a long
list of goods. By contrast, the GST
applies to almost everything; its exemptions are basic
groceries, many medical items and health services, used residential
housing and a few other things.
raised $5.072 billion with its 7% sales tax in 2008, and
$4.958 billion last year. It will be awhile before we learn
how much the Campbell government expects to raise as its share
of a 12% HST. It may be "revenue neutral" for the
government, but that doesn't mean it will be neutral for consumers,
especially for new home buyers.