The HST Is Not Evil
HST: How It Works
Two days ago, if anyone had asked me what I thought about the proposed HST in British Columbia, I would have told them that Gordo, the little weasel, had screwed over British Columbians once again. But that was before I actually took the time to learn everything I could about the new Harmonized Sales Tax.
With the recession and promises of no taxes by the BC Liberals, it isn’t a wonder many people in this province, low-income families and small businesses alike, were weary about the HST. Any mention of taxes, save for tax cuts, is bound to stir up outrage, in a recession, no less. But I have to admit the HST is not a bad idea.
Before you go calling me a Liberal patsy or any other such unflattering names, let me state for the record that I am a social democrat at heart and have voted for the NDP since I turned eighteen. But this isn’t about partisan politics. This is about what’s good for the province and the people of this province. Rest assured, I have many qualms about the BC Liberals but the HST may be the one thing we agree on.
Instead of shooting the new HST down, let’s look at the numbers. The current GST in BC is 5 percent while the PST is 7 percent, for a total of 12 percent. The PST is non-refundable, whereas the HST, also at 12 percent, will be. Goods that are currently exempt from the GST will be exempt from the HST. This means that groceries and rent costs will not be taxed with the new HST.
The PST, currently 7 percent, is charged multiple times on items as they move from production to consumer. With the HST, this will be eliminated, saving money for businesses which are then able to pass on the saving to consumers through lower prices.
I mentioned above that the HST unlike the PST will be refundable. Under the HST, there will be tax credits for businesses called input tax credits or ITCs. This means that “…businesses [will be] able to claim input tax credits (ITCs) for the HST they pay, effectively recovering the tax they pay on their business inputs.” (Source)
If a business pays more HST than it collects from its customers, then in this situation, the business can claim a refund. If businesses pay less, consumers pay less. In the long run, we will all benefit.
Related posts:
- The Ontario Tories Have Lost Their Voice in the HST Debate Many Ontarians are wondering: where is the official opposition in...
- Good or EVIL! As an English Quebecer via BC and Ontario, I believe...
- Democracy, Deception, Political Spin and Government Integrity: The Vancover “Olympic Vote” Smoke and Mirror I would like to take a few minutes to clear...
- HST Virus Introduced to British Columbia’s Economy Already Sick With Olympic Fever and Swine Flu A friend of mine recently used her Facebook status to...
Tags: british columbia, Harmonized Sales Tax, hst, taxes
Loading ...
November 1st, 2009 at 5:49 pm
There are a lot of misconceptions about the HST; when I heard that the Green Party of BC supported it because it was what small businesses wanted, that was a first clue that perhaps it wasn’t so bad. Unfortunately, the BC NDP has been more interested in politicking than in doing the right thing, and they’re sowing a lot of confusion. They did the same thing with the carbon tax.
November 1st, 2009 at 6:02 pm
So then now that we have extra tax being placed on our homes, you know those major 350-900 thousand dollar purchases the average person in BC makes do you not think that the interest accrued over the course of the mortgage on that increased tax will more than make up for any savings? By the way, just like carbon tax we now have additional artificial inflation on the value of our homes, makes buying here both less affordable and less profitable than in other parts of the world.
November 2nd, 2009 at 12:36 am
You’re right Travis. When it comes to homes in Greater Vancouver area, the prices are completely outrageous. There should be greater tax incentives for home buyers since the average price of a home in Vancouver is quite unaffordable. (There was a story in the Province that said the average price of homes in Vancouver is nearly a million dollars.) I don’t know anyone who can afford a million dollar home. I think that only brand new homes will be subject to the full HST whereas resale properties will not be directly affected. Home inspections and other costs associated with buying a home might be subject to the 12% HST.
You can find more information at this site: http://www.bcrelinks.com/articles/dtd10.htm
November 2nd, 2009 at 11:55 am
Travis etc: there are huge incentives for purchasing a home in Canada already – like the $600 billion (60% of GDP!) that CMHC is permitted to deploy insuring high risk low ratio mortgages. If you ask me, it’s time we removed some of this stimulus to start really bringing home values down to an affordable level.
November 2nd, 2009 at 7:38 pm
I’ve read about that CMHC nonsense. Apparently the banks will give mortgages to any risky borrower because they won’t lose any money since the CMHC will cover the costs. This practice should be abolished as it only costs taxpayers money.
November 3rd, 2009 at 2:29 pm
Well, bear in mind that a homeowner with CMHC coverage pays roughly 2% more than a borrower who doesn’t require it. Since most people are relatively honest and pay their bills, the CMHC benefits greatly from the premium, the banks benefit by being able to mortgage someone who isn’t generally mortgagable, and you and I benefit by the fact that home construction employs people, which means we don’t pay them social benefits through tax remittance because they are unemployed.
As well, we have less people renting as a result of homeownership, which reduces over all poverty, and crime. Not to suggest all renters are poor or criminals, but typically high density housing errodes over time, while home ownership also tends to instill a greater sense of pride, which leads to better lifestyles, expectations, homelife, etc…
In the end, the CMHC has proven way more beneficial that bad, and it is in no small part thanks to them that Canadians and Canadian banks suffered much less than the Yanks.
In fact, it could be argued that if HST on things like inspections, purchase price, land transfers, etc… are now unaffordable for the average homebuyer, then maybe the homebuyer shouldn’t be buying, as those are the least expensive components of home ownership.
It’s foolish to think that the tax you pay would earn more interest than the value of your home. Statistically it is proven over and over again that in Canada the best savings account with the most stable rate of return short of a bond is real estate.
I have lived 45 years in one of the most volitile markets (Calgary) in the country and for 25 of those years I’ve enjoyed a return of approximately 10% per annum on my home… That’s not a bad day at the park by anyone’s standard.
I have to admit though, you guys pay a heck of a lot of tax in BC.
November 7th, 2009 at 11:19 pm
Ah, hello Mr. Rightwing Propaganda,
GST stands for goods and SERVICES tax. Lots of things we like to call services will go up 5%. As usual, the people get screwed while the rich (business owners) get the breaks.
November 18th, 2009 at 8:24 pm
I don’t agree with the hst at all
November 29th, 2009 at 4:12 am
I do not like the HST and if the Harper Government force this on us me and everybody in our family will never vote or suport the conservative party ever again.Here in B.C. the Campell governmet has given us a carbon tax and now there is talk of another tax and i here it is Stephen Harper.We have suported the Reform party and then the Canadian Alliance that is 20 years of being a member and then you slap us in the face the cost of everything will go up in price food drugs medications gas hence fourth the cost of food going up the truckers pass the cost on to the people that need this. Come on Stephen do not be like Gordon Campell, we do not need another tax , it is like your government wants us to leave the country we are a big waste of time for you and the government then step down the hst is a stupid thing to do and it is something the liberals would do.If you run hst through i will tell all my friends not to vote for you again.
December 9th, 2009 at 5:39 pm
I hope everyone realizes that teachers declined an entitled pay raise. They deserve a lot of praise and recognition, for doing so. They thought of their students, first, and their colleagues as well. They, did that sacrifice.
Now, government officials, you are to blame for all of the corruption. Let me tell you, when the little guy can no longer pay for all the corrupt officials, this country will collapse. Government, is far too top heavy, they need to reduce their numbers, by 40%, they need to take a 35% cut in salary’s. They can enforce big corporations to pay a 30% tax off the top, you, know, the same way the government forced the HST on destitute civilians. Gordon Campbell should get a 53% cut in salary, after all, he isn’t worth two cents. Campbell, should have to pay back BC residents for everything, he has stolen from them. Now, that is what, democracy, freedom and fairness is all about.
February 8th, 2010 at 2:23 am
HST will be a disastor for BC as this province has already weak economy,
Restaurants will charge more 7% likewise Real Estate purchase will be
Taxed 12%…….Common person will suffer
With low paid jobs it is impossible to pay an apartment rent for most people
In Vancouver ,I wonder what more disastor will come with HST
Dont forget to check what HST has done to the ecomomies of NS NB NFL
and of Course the Royal Quebec