2. “The HST has shifted a huge tax burden from business to middle-class consumers – the people who really pay the bills in B.C.” Personal income tax rates for “middle class consumers” have decreased 25 per cent across the board since 2001 in B.C. What this means is that if you live in B.C. and you earn less than $115,000 a year, you pay less income tax than an Albertan earning the same amount because Alberta has a flat 10-per-cent tax. And if you earn less than $71,719, you are paying substantially less provincial income tax in BC than an Albertan who earns the same amount.
So when someone complains about the HST being a middle-class “tax grab,” that person should also know that the “middle class” in B.C. is paying far less income tax in 2010 than it did in 1999. I’m pretty sure the middle class doesn’t want its provincial income tax to go back up 25 per cent, does it?
3. This tax rewards large companies for exporting jobs and raw resources to countries like India and China. But because all companies (large and small) will be able to claim the input tax credits on the additional 7 per cent or 8 per cent of HST (depending on whether you’re in B.C. or Ontario), businesses are more likely to keep jobs in HST jurisdictions than export them. The elimination of PST and its replacement with the HST is designed to keep businesses in Ontario and B.C. because they don’t have to swallow the 7 per cent or 8 per cent PST any more.
It’s also designed to help budding (and experienced) entrepreneurs to start their own businesses and hire more people.
Consider the following (again, doing the math): You’ve just been laid off from your job because of the economic downturn and you decide to start your own business. You go out and spend $3,000 to purchase a new computer, printer and software. Under the PST system, the province would charge you an additional $210 in sales tax, regardless of the fact you haven’t even started your business and you haven’t earned a penny.
But under HST, the government still charged you $210 in sales tax (the 7 per cent in B.C.) on top of the 5 per cent GST, but because you’re buying the computer, printer and software for purposes of gaining and producing income — that is, you’re buying it for business purposes — the government gives the $210 back. You are only taxed once you have started your business, earned a profit, and then taken the profits out of your business to spend on goods and services for personal consumption.
4. “This is a massive tax grab taxing us to death…” The HST is revenue neutral for the B.C. provincial government. If anything, there is some concern that the switch from PST to HST may actually reduce the total sales-tax revenues the province receives in the first few years following harmonization. This is why the $1.6 billion in financial assistance from the federal government was so important to the province in order to convince B.C. to harmonize with the GST/HST.
Virtually all goods that individuals purchased in BC under the old PST were already subject to the 7 per cent sales tax, as well as key services such as telephone, long distance, cable, and repair services. The only significant change is that “pure” services — such as haircuts, restaurant meals, and accounting and consulting services — will become subject to the additional 7 per cent provincial tax under HST. However, barbers, restaurateurs, and accountants will now be able to recover the 7 per cent sales tax they pay on their inputs, thereby reducing their costs of delivering these services.