The HST Blog : Canada Harmonized Sales Tax Lawyer Cyndee Todgham Cherniak for Assessments, PST & RST Issues in Ontario, British Columbia & Quebec

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Today is July 22, 2011.  By midnight tonight, all residents of British Columbia should have their HST referendum ballots to Elections BC.  It is no coincidence that July 22, 2011 is the deadline - On July 23, 2009, the B.C. Liberal Government announced they would implement the HST in B.C. as of July 1, 2010.  The B.C. Liberal Government should have asked the question 2 year ago.  But they did not because a referendum 2 years ago would have decisively rejected the HST.  Two years later, the result is indeterminable.

In light of the fact HST was announced two years ago and the HST has been in effect in B.C. for just a little over one year, the ballot question makes more sense. The actual question on the ballot is: “Are you in favour of extinguishing the HST and reinstating the PST in conjunction with the GST?”

A "Yes" vote means that the voter is making a statement of the B.C. Liberals that the HST should stop and the Social Services Tax (PST) should be reinstated.  Under the old PST regime, most goods were subject to sales tax (exempt goods were not subject to sales tax), only taxable services were subject to sales tax (some services were taxable and many services were not taxable), real property was not subject to sales tax and intangible property was not subject to sales tax. 

A "No" vote means that the voter has accepted the HST should remain and the voter has faith that the B.C. Liberals will reduce the HST rate as promised.  Okay, some of the voters who vote "No" may not believe the B.C. Liberals will keep their promise, that element is not critical to the vote choice.  A "No" vote keeps the HST in place.

Many people have asked me what is the right answer to the referendum question.  As an HST lawyer, I cannot answer that one as the answer does not come from the law. 

The democratic  ideals that Canadians hold dear require the residents of British Columbia to submit a vote on the HST referendum question.  How often are the residents of a province asked for their views on tax policy? -- well, never.  This is an opportunity of a lifetime, appreciate the opportunity.

It is all fine and wonderful that the politicians are now asking for the voters to participate in the democratic process on HST.  The voters know that to vote "No" is to approve actions of the government after the fact.  Some voters will see the "No" vote as an answer to as different question:

• Should I let the government get away with misleading the people of B.C.?
• Should we let Premier Campbell's legacy be that B.C. residents ultimately agreed with his decision to implement the HST?
• Should the government have raised taxes without taking the opportunity to make spending cuts?

Other voters will not be as negative in their approach to the task at hand.  Some of the voters who vote "Yes" will be answering a different question:

• Have I adjusted to the HST?
• Can I afford to pay the HST on a wide range of property and services in order to maintain a strong economy?
• Would I prefer the status quo instead of more changes to the sales/consumption tax regime in Canada?
• Is the devil we know (HST) better than the devils we do not know (the new taxes and fees that the government will impose to raise revenues)?

The residents of B.C. who have lost their jobs because of HST or gained employment after HST implementation will focus on different elements behind the referendum question.  The small and medium sized business owners who have lost B2C business will have to ask if the consumers will return if the tax regime returns to the old PST system.  Small and medium sized businesses will also weigh the administrative ease of compliance with the HST system (ask if it is easier first) and the fact that if they make errors, The assessments that the Canada Revenue Agency will make will be significantly higher and penalties and interest on assessed amounts (also a form of penalty) will be higher.  Audits will be more stressful and fighting the taxman will be just as hard (the amounts at stake in the fight will be higher).  Small and medium sized businesses also need to ask whether they will be increasing their cost of tax compliance leaving less profit.

There are many tough questions.  Take 4 deep breaths and determine what vote is right.  Then continue to breathe as British Columbians wait for the referendum results.  How long before B.C. gets the results? That will depend on how many votes are submitted and all the theatre that will take place as the votes are counted and recounted.

Please comment on how you voted and why (please keep it clean my dear readers).