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Official end of HST divides British Columbians

Anti-HST supporters, led by former B.C. Premier Bill Vander Zalm, get their wish to break up the tax starting today.

Chad Hipolito/The Globe and Mail

Fresh from a spell outside to check his beloved lilac bushes, the long-time Delta businessman said he was all set for British Columbia's unprecedented switch back to its old sales-tax regime.

While thousands of businesses scrambled to register at the last minute, there was no such procrastination at Vans Nurseries. "We're registered, and it was easy as pie," 78-year-old nursery owner Bill Vander Zalm said cheerily. "We've had to change before. We're used to it."

Of course, there was another reason for Mr. Vander Zalm's alacrity.

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More than anyone, he engineered the change in the first place, spearheading a provincewide revolt to kill the single, 12-per-cent tax known as HST and return to separate provincial and federal sales taxes.

Essentially, the Harmonized Sales Tax increased taxes on many consumer goods and services, while lowering the tax burden on most business activities. Implemented shortly after the Liberals' re-election in 2009, the HST was voted down in a referendum two years later.

The tax dies officially on Monday.

While wags might consider April 1 a particularly apt date for the change, it could also be termed appropriate, given the number of firsts stemming from the ultrarare tax reversal.

It's the first tax measure to be defeated in a provincial referendum, the first time a jurisdiction has ever dipsy-doodled from a retail sales tax to a more comprehensive, value-added tax, then back again, and, according to Jock Finlayson of the Business Council, the added levies on the corporate side will amount to the largest tax increase on business in the history of B.C. – an estimated $1.5-billion a year.

"Although most people by now are tired of the issue, the change is a huge deal from a tax-policy point of view," said Mr. Finlayson.

With the restoration of a provincial sales tax, industries, businesses and manufacturers will lose significant cost exemptions they had under the HST, which targeted consumers almost exclusively, he said.

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"While this will make it cheaper for consumers to buy stuff, there will be a fairly negative, long-term consequence on investment and business activities."

Still, the impact varies from business to business, with myriad rules, exemptions and hard-to-determine, sometimes baffling regulations back in play, after the efficiency of a single tax.

"You practically need a road map for all the changes," said Mike Klassen of the Canadian Federation of Independent Business. "There's a lot of grumpiness about making the transition."

Naomi Yamamoto, provincial Minister of State for Small Business, said that is likely a factor in the "worrying" number of businesses delaying their registrations. "They're not happy about returning to PST, and I don't blame them."

Restaurants and other food establishments, however, say they are overjoyed to go back to a lower tax on patrons, rather than apply the HST.

"It's the old days again, and that's great," exulted Maj Yee, who runs Goldilocks Bakeshops in Vancouver. "We definitely noticed a falloff when HST came in."

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Ian Tostenson, head of the B.C. Restaurant Association, said the industry is hoping for a four-to-six-per-cent bump in business, due to the PST's return.

"April 1 will be a good day. Not only is it a saving, it's a psychological boost, like getting a little bit of a raise," said Mr. Tostenson.

On the other side, the province's increasingly beleaguered film industry, which was a big beneficiary of HST exemptions, estimates the shift back to the PST will pad film budgets by about 2.8 per cent.

"That's a big chunk of dough," said Peter Leitch, chairman of the B.C. Motion Picture Industry Association. "For me, it's all about jobs. If people have a job, they're willing to pay an extra few cents for a cup of coffee."

Ed des Roches of Plum Clothing said the change won't affect most purchases, but HST was a superior tax. "It was on everything, no exceptions. If you're going to have a sales tax, that's the way to do it."

Mr. Vander Zalm, meanwhile, was front and centre at a celebration of the HST's demise in front of the legislature on Sunday, oblivious to the gnashing of teeth that still accompanies mention of his name among supporters of the now-defunct tax.

Looking back on his lengthy, controversial career in politics, the former premier, ex-cabinet minister and onetime mayor of Surrey said the anti-HST campaign was special.

"It's an accomplishment that I treasure as much, if not more, than anything else I've done," said Mr. Vander Zalm. "It was a great show for democracy."

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