British Columbia Premier Announces Plans To Reduce BC HST From 7% to 6% to 5%
On May 25, 2011, British Columbia Minister of Finance Falcon announced that the B.C. government will reduce the PVAT rate (B.C. HST) from the current rate of 7% to 6% (July 2012) to 5% (on July 1, 2014). I am disappointed because Premier Clark was promising a bold announcement. I was hoping for a list of point of sale exemptions or something more innovative. Too much hype and not really a fresh approach.
The HST/PVAT rate cannot be reduced before the two year anniversary date by contract with the Government of Canada. In the Comprehensive Integrated Tax Coordination Agreement, British Columbia agreed that it would not reduce the HST/PVAT rate for 2 years. As a result, the first stage of the reductions cannot happen sooner.
Currently, the combined GST/HST rate in Ontario is 13%, in Nova Scotia is 15%, in New Brunswick and Newfoundland/Labrador is 13% and in British Columbia is 12%. Since Alberta does not have a provincial sales tax, some like to argue that the GST/HST rate in Alberta is 5% (which technically in wrong). So, it would be technically correct to say that British Columbia would have the lowest GST/HST rate (still) if the changes are implemented.
Here is the "catch", the announcement is that rate will be reduced if the voters in British Columbia vote to keep the HST in the June/July referendum. The ballots for the HST referendum will be mailed out to B.C. voters on June 13. All ballots must be received by July 22 to be counted. What they do not say is that the HST/PVAT rate will be reduced to 0% if the referendum is successful (unless Premier Clark goes back on Campbell's promise).
The gamblers in British Columbia need to ask whether they should vote "no" in the referendum against keeping the HST (PVAT). If they are successful, the rate goes to 0% and they go back to the 5% GST and a retail sales tax. Or, the no referendum win would allow British Columbia to negotiate a better HST deal with the Government of Canada. Alternatively, the voters could vote "yes" in favour of keeping the HST and accept limited & staged reductions in the PVAT rate.
Businesses may also have something to say about today's announcement. The staged reductions require more effort than merely a change to the sales registers and computers. The positive news for business is that they will have approximately a year to undertake the reductions in their business systems.
Cyndee Todgham Cherniak is counsel to and in affiliation with the International Trade Law and the Tax Law (Commodity Tax
It's really simple no HST means NO HST. I believe Premier Clark and the Liberal Party think that we are all stupid. Please please please please look at the real math. We pay more, corporations pay less. And corporations are going to give us price breaks, and pigs will fly.//// Someday.