Yes, it is naive to assume you’ll see the cost of your haircuts or dining out drop by 7 per cent, but to describe HST as a “massive tax grab” is a gross exaggeration. HST will result in British Columbians paying 7 per cent tax on about 20 per cent more of the goods and services they purchase — that’s 7 per cent of 20 per cent, or about 1.4-per-cent more. But if I had a choice between a 1.4-per-cent increase in the amount of sales tax I paid versus paying 1.4-per-cent more in income tax, I say tax me when I spend my money (sales tax), not when I earn it (income tax).
If you don’t tax me when I earn my money, I can choose to pay down my debt or save my money, and therefore pay no tax, but if you increase my income tax, I pay tax regardless of what I do with my money.
5. My favourite comment: “Best editorial I've read yet on HST … but as a resident of Ontario whose business is in direct competition with companies in BC, I would welcome the new businesses that would end up in Ontario if B.C. repeals the tax. So come on BC, repeal that tax!”
This comment was echoed by Ontario Premier Dalton McGuinty, when he said “there's no doubt about it, it would give us (Ontario) a competitive advantage.”
HST benefits average working British Columbians because it means businesses will now choose to locate their operations in B.C. as opposed to elsewhere in Canada and will bring the jobs that come with them. When Ontario announced it was harmonizing with the federal GST/HST and eliminating its sales tax, it gained a significant tax advantage over B.C. If BC had not followed suit to eliminate PST and harmonize with the HST, there would have been a significant incentive for businesses – particularly hi-tech and the film industry – to relocate or choose to locate in Ontario. (The computers, software, computer servers, and equipment used by these industries are all subject to PST.)
If that had happened, these businesses would have taken all of those jobs along with them. So if you’re in B.C.’s busy film industry, or its high-tech sector, your jobs could well have moved to Ontario had B.C. remained a PST jurisdiction after Ontario became an HST province.
The final benefit of HST over PST is that we’ll become an even better jurisdiction than the United States to do business in. The United States remains the last country among all the OECD member nations to impose sales-and-use taxes (PST) as opposed to a value-added tax (HST).
HST gives British Columbia, Ontario and other HST jurisdictions in Canada a significant competitive advantage over the United States. If you’re a foreign company looking to do business in North America, with HST, British Columbia and Ontario suddenly become very attractive alternatives to Washington State, California, New York, or anywhere else in the lower 48 where business has to swallow the state and local sales tax and not get anything back for it.
Attracting foreign investment to British Columbia not only brings high-quality, well-paying jobs to the province, but for the provincial government, it generates tax revenues that help pay for education and health care and all the things everyone expects government to do.
As I promised, those are the facts.
Special to the Globe and Mail
Vancouver franchise lawyer Tony Wilson is the author of Buying A Franchise In Canada – Understanding and Negotiating Your Franchise Agreement and he is ranked as a leading Canadian franchise lawyer by LEXPERT. He is head of the Franchise Law Group at Boughton Law Corp. in Vancouver and acts for both franchisors and franchisees across Canada, many of whom are in the food services and hospitality industry. He is a registered Trademark Agent, an Adjunct Professor at Simon Fraser University and he also writes for Bartalk and Canadian Lawyer magazines.