Jordan Bateman: HST hangover still with us, one year later

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      She’s back—the ex-girlfriend we just can’t put behind us. Yes, the spectre of the harmonized sales tax (HST) still looms over our tax system, a full year after it was scrapped.

      As predicted last January, memories of the HST have indeed continued to pop up at the strangest times. The most recent reminder comes from eagle-eyed taxpayers filling out their income tax forms. These sticklers have noticed a stealthy tax increase due to a reduction in the basic personal amount (BPA)—the threshold amount Canadians are able to earn before having to pay income tax.

      Since 2012, B.C.’s BPA has dropped from $11,354 to $9,869. Meaning, you now pay taxes on that extra $1,485. If you add in the lowered spousal amount tax credit, the average family is paying an extra $168.81.

      That’s on top of other provincial tax and fee increases.

      Compared to just five years ago, British Columbians now hand over an extra $20 bill every week of the year to the provincial government. This is the biggest jump in the country.

      This is a hangover from the HST. When the legislation was repealed, the BPA increase that had been brought in 2009 went with it. If the HST had stayed in place, the BPA would likely be $11,524 this year.

      The B.C. government should address B.C.’s low BPA. Two provinces to which B.C. is losing population, both have far higher amounts: Alberta’s is $17,787, while Saskatchewan’s is $15,378. Even the federal threshold is $11,138.

      The basic personal amount isn’t the only time the HST comes up in conversation. Rarely does a week go by at the Canadian Taxpayers Federation’s B.C. office without an email or phone call on the private car sales tax.

      When the HST came into place, the province passed a second piece of legislation that slapped a 12 percent sales tax on “designated property”—private vehicle and boat sales. The referendum overturned the HST legislation, but not this other tax, much to the dismay of people buying vehicles from one another. The PST on those cars and boats must be paid, even if it is a gift.

      Small businesses are also still trying to come to terms with the new provincial sales tax rules. A fireplace company told us recently that they are forced to charge different amounts of PST depending on whether they install the fireplace or not. If it’s a retail sale, meaning the buyer takes it home themselves, the customer pays PST on the fireplace’s entire sales cost. But if they get it installed, the company only needs to charge the customer the tax on the wholesale cost of the fireplace.

      Complications like this make it very difficult for companies to track sales costs and communicate accurate pricing to buyers.

      Did repealing the HST save taxpayers money? Everyone’s individual situation is different, so it will depend on what kind of consumer you are.

      The government’s own budget documents show that in 2012, a family making $60,000 a year paid $1,262 in the provincial portion of the HST. In 2014, that same family paid $1,091 in PST, a savings of $171 in straight sales tax—incredibly close to the $168.81 paid in extra income tax due to the BPA and spousal reductions.

      B.C. and the HST broke up a year ago. While the May 2013 election cleared the decks of the political consequences, the struggle to get past all the other weird wrinkles of the HST era continues. The ex is still with us, and may be for some time to come.

      Comments

      4 Comments

      AC

      Mar 27, 2014 at 9:36pm

      Our self-professed free-enterprise government effectively convinced voters that NDP would raise taxes. But what's happening is that BC Liberals doing us one better - they are nickel and diming our wallets dry while quietly dismantling all of our societal safety nets.

      ACMESalesRep

      Mar 28, 2014 at 12:04am

      The problem isn't the “hangover”. That was the cost of getting rid of the HST. The problem was getting rid of it in the first place. It was, and would still be, a better tax than the non-harmonised PST. Voting to get rid of it was one of the more idiotic things this province has done in recent years – if voters wanted to punish the Liberals, they should have simply voted NDP rather than voting against good policy out of a misguided sense of spite.

      The HST hangover will be with us forever.

      Mar 28, 2014 at 8:53am

      What do you expect when you re-institute a 1950's tax system on a modern economy?

      One point often overlooked is that BC has a massive underground economy and consumption taxes are one of the few ways to access this money. This was one of the reasons HST revenue was higher than projected. Now that extra revenue is gone forever. Plus, it helped businesses with capital investments (that has plummeted this year and is dragging the economy down) which in the end helps everyone. Plus, there were numerous tax credits and refunds created to ensure low income people came out ahead. This was all articulated at the time, but Zalm ensured this was an emotional debate rather than a pragmatic one. So now we're all going to be getting the shaft for years.

      Besides the sheer stupidly of reverting back to a post war tax system in 2013 we also have the taxation by referendum legacy. Every major tax increase or reform now requires a referendum (see Transit). The best part is that all the people who were shouting the loudest about the HST are now the loudest whiners about the Transit referendum. Careful what you wish for you.

      Reality

      Mar 28, 2014 at 4:05pm

      Why as Voters accept any form of 'punishment' by these Neo-Facist Con Conservatives?

      Why is it an either or choice? We as Voters can decide but unfortunately we as Voters get duped by FUD (Fear, Uncertainty and Doubt) by politicians.

      Most of us won't leave our comfort zone and Recall Politicians.

      As long as we Vote just on party lines we will be easily divided, manipulated and conquered by greedy Corporations and Special Interest who own most Politicians.

      The HST was and is Corporate Welfare, the PST a bit less Corporate Welfare but not good for British Columbian's either.

      If the Government eliminated wasteful spending and increased Royalties on Natural Resources instead of Corporate Welfare we could be a Tax Free Province.

      Norway's Resource Royalty structure in Oil & Gas is a lesson to us all, Norway being one of the richest nations on the planet because they keep 80+% of Revenues from Oil & Gas for their Citizens!

      But instead it's all about Corporate Welfare here in BC and Canada,

      - $200 Million + already announced in subsidies for LNG Development with more to come,

      - PPP Private above Market Rate Power Contracts forcing BC Hydro to buy inflated above Market prices Power from Private Corporations paid for by you and I,

      - Causing Tens of Billions in BC Hydro Debt yes to be paid by us courtesy of the BC Lie-berals,

      - $565 Million for a Leaky Tarp Roof = more Corporate Welfare,

      The list goes on and on.