HST: a digest about the 12% HST tax in BC

Online exclusive ~ MapleLine Magazine

Last update: August 21, 2010 ~ The new 12% HST tax became effective July 1, 2010

BC Government website: business info about HST | Federal HST business transition info

HST Tax Calculator HST Petition / Become a Canvasser Download: FightHST poster

How the HST will affect small business Select Standing Committee to receive petition

ARCHIVE OF Sooke-area MEETINGS:

Info Session in Sooke ~ all businesses welcome. Wed. May 12, 1:30 pm, at the Mason/Shriner building on Throup Rd. Organized by the Sooke Region Chamber of Commerce:11250-642-6112

Petition Signing in Sooke ~ Another signing opportunity for petition to repeal the HST. Sat. May 8. At the Sooke Community Hall.

Info Session in Sooke ~ all businesses welcome. Tues. March 9, 12 noon, lunch meeting in the upstairs meeting room at Village Food Markets. $12 payable to the Sooke Region Chamber of Commerce. Phone or email to register by noon, Mon. March 8: 250-642-6112

Previous entries:

Just about every product and service in BC will be taxed at a rate of 12% starting July 1, 2010 if the now-legislated Harmonized Sales Tax (HST) remains in effect.

Whereas most services and a number of products have pretty much always been exempt from the provincial sales tax (PST) in BC, the majority BC Liberal government announced July 23, 2009 that the 5% federal GST would be combined with the 7% PST for a harmonized 12% tax, starting July 2010. Exemptions from the tax were initially few, including groceries, prescription drugs and medical devices, and children-sized clothing and footwear -- but in the Sept.1, 2009 provincial budget there appeared to be some sensitivities with exemptions announced for energy to power and heat homes, gasoline for motor vehicles, books and children's clothing. Previously the exemptions were stated as "for gasoline, diesel fuel, marine diesel and aviation fuel". Previously, open to determination was whether or not the HST would be applied to the purchase of books, children's car booster seats, vitamins, and diapers to name only a few items. See specific details about the HST on this government website: HST information.

Apparently the incentive for the BC Government was that it will receive $1.6 billion from the federal government as a 'transfer tax' with those funds apparently to support education and health expenditures in the province. However, more than that will reach the BC government coffers if the HST comes into effect. The Sept.1/09 provincial budget announced increases in the basic personal income tax credit but at the same time increased MSP premiums at a rate of 6% per year for the next three years; apparently the health care (the province's largest expense) will grow by 6% each year -- therefore, taxpayers are carrying the full burden of cost increases. In this aspect, at least, health care in BC appears to be edging closer to a user-pay system.

The 12% HST tax, if it reaches the implementation date without challenge, will apply to virtually all purchases made in the province. Consumers will be hardest hit (being at the end of the chain), though small business and particularly the hospitality industry, are coming out most strongly against the tax, saying it will damage their ability to perform, and that the overall provincial economy will suffer.

Whether due to shock or a feeling that nothing can be done, the response from voters was minimal and sporadic from business at best. Until former Socred premier Bill Vander Zalm (who retired in 1991) announced on August 19 that he would lead an effort to request a province-wide referendum.

Using a system that the government under his direction put into place in the 1980s, Vander Zalm will use the recall/referendum system to request a referendum by the BC government. The system requires that 10% of constituents in every BC constituency sign a petition within a 90-day period. No small undertaking, but possibly within range of achievability if spearheaded by a high-profile leader. The referendum request effort was launched with a rally in downtown Vancouver on Saturday, September 19, 2009.

About 3,000 people came to attend the September 19, 2009 rally in downtown Vancouver. Provincial NDP leader Carole James and former BC Premier Bill Vander Zalm spoke at the event. "The economy is going to be hurt and they're going to lose job," said Vander Zalm, adding that the 12% sales tax will take money from those least able to pay during an economic downturn. "It's a cruel tax," Vander Zalm said. "It takes from the people, the consumers, particularly... the seniors, the students, the people that can least afford t pay yet another tax and it's giving to the big corporations." Rallies were also held in about 15 BC communities including Kelowna and Prince George. In response to the September 19 rally effort, the BC government responded at their own press conference: "As a government we feel very strongly this is absolutely the right thing to do for British Columbians and it will ensure that British Columbia is a stronger province," said Finance Minister Colin Hansen. [This paragraph assembled from a news articles at vancouversun.com and cbc.ca, September 19/09.]

According to a commentary (on the editorial page) in the Times Colonist, Sept.22/09 (referring to remarks by Bill Tieleman, the journalist-NDP strategist-communications consultant who is organizing the HST drive), the anti-HST drive is pitching the unlikely pairing of NDP and former Socred as proof of the anti-tax movement's broad base. Per Les Leyne in that same editorial: "It illustrates a couple of other things as well. One is the number of agendas involved. There are so many different games being played you need an agenda to keep track of all the agendas. ... Conservatives have been passing the time taking each other to court over who the actual leader is. But they see the HST as the issue that will fracture the Liberals and pull some right-wing support their way." [The Times Colonist, Sept.22/09]

Organizations that have advertised against or spoken out against the HST include the BC Restaurant and Foodservices Association (BCRFA) which has estimated a cost of $1,800 per year to the average consumer; an organization called The BC Liberal Tax Grab; and the Condominium Homeowners Association of BC. A meeting of the Greater Victoria Chamber of Commerce (August 20) saw 300 small business owners attend; apparently about half the attendees complained about the tax and half asked questions about how business will be affected. The Council of Tourism Associations (COTA) on September 4 warned that the 12% HST could cause some businesses to fail due to -- in essence -- what will be the addition of 7% to the cost of most things; according to the Times Colonist, some industries insiders warn the loss of Tourism BC as an independent entity could seriously hamper effective marketing programs leading up to and following the 2010 Olympic Games. COTA is undertaking a study of the impact of HST, hoping to have 'hard numbers' for government by the end of September.

On August 24, a group of 23 businesses in Victoria, BC came out in favour of the HST. According to an article in the Times Colonist, BC's manufacturing sector teamed up with representatives of the retail sector, movie industry and small business to back the province's decision to introduce the 12% harmonized tax. "We've been advocating a shift away from the provincial sales tax toward what we call a value-added tax for more than 10 years," said Jock Finlayson, executive VP of the Business Council of BC. He claims that value-added taxes are good for investment by providing incentives for companies to modernize operations, etc. Speaking against the Aug.24 announcement was Bob Wright, owner of Oak Bay Marine Group which operates eight resorts in BC: "It insults me that [government] thinks I'm so goddamn dumb in business that I buy all that crap," he said of the notion of a trickle-down effect from assisting big business. Wright says his business stands to lose as much as $1.5 million next year; apparently that translates to cutting his staff of 1,000 by 25 to 30 percent. Wright suggests that the tax, if still deemed necessary, be phased in slowly as BC pulls out of the recession.

A Times Colonist editorial by Les Leyne (Aug.25/09) clearly explained how the delayed support-response from those 23 large businesses (mentioned above) was notably missing the real estate sector and restaurants (which are firmly opposed). Big business is not the same as small business; what helps one sector does not often help the other. The taxpayer, he argues, pays in the end, as consumers will watch business get a $2 billion tax break if the HST comes into effect. "It's getting people to accept the overall business tax cut that's the challenge," wrote Leyne.

The BC Legislature resumed sitting on August 25; the Throne Speech showed the province facing an economic situation considered the most difficult in 27 years. Premier Gordon Campbell said BC must "live within its means"; his speech included an announcement of a sweeping audit of Crown corporations (including BC Hydro, ICBC, and BC Ferries), health authorities and school boards that will aim to find ways to economize wherever possible. The Throne Speech defended the HST set for July 2010, saying the controversial tax will cut business costs by $2 billion per year, while a $1.6 billion in federal transition funding (awarded for bringing in the tax) will apparently help protect health and education services.

Federal MP Dr. Keith Martin called the HST a "bolt out of the blue" in a letter to the editor (Sooke News Mirror, Aug.26/09). Martin says the tax will likely hurt tourism, home building, and restaurant sectors "and will exacerbate the job losses they have seen during the recent economic downturn". Dr. Martin, who is the MP for Esquimalt-Juan De Fuca, suggested in his letter that an HST could benefit both the consumer and our business sector in this manner: 1. Apply the HST only to those products that previously were subject to both the PST and GST. 2. Drop the HST from 12% to 10%. 3. Implement a more effective, streamlined and efficient tax reporting process to reduce the administrative burden on business. 4. Engage in a wide ranging consultation process with businesses and consumers, to identify ways to reduce any harm the HST may inflict upon them. 5. Ensure that the $1.6 billion federal incentive (for accepting the HST) would not be withdrawn. Martin concluded by insisting that quick implementation of changes to the HST plan is essential "for the sake of our province and its citizens".

Local Sooke business and consumers will of course be among those affected by any tax changes or increases. "I had always thought that The Stick's first price increase might go to covering costs of doing business. The Liberals have a different idea," said David Evans, owner of The Stick in the Mud Coffee House, when the HST was first announced.

Owners of rental buildings are one of many groups complaining about the new tax. They say it will increase their operating expenses by as much as 3%. With rental vacancies in Vancouver hovering around 2% in Vancouver, the city is desperate to attract and retain landlords. HST will increase operating costs for services that weren't previously subject to provincial tax, including maintenance and accounting fees. Marg Gordon, CEO of the BC Apartment Owner and Managers Association, said landlords are in a bind because they can't collect the additional HST costs from their tenants due to rent controls. She thinks landlords should get a break from the government, either through rebates or tax credits. [This paragraph assembled from a news article at cbc.ca, September 18/09.]

On October 6 there was a glimmer of hope for those who oppose the HST. There is a remaining option to cancel the BC government's plans to implement the HST tax next year, and that would be for a non-confidence vote (regarding the federal government's vote on providing a $1.6 billion payment to BC for implementing the HST) by the federal NDP (under the leadership of NDP leader Jack Layton) in the House of Commons in the next few weeks or months. That would bring down the government and a federal election would be called. See NDP position on the HST tax.

November 28, 2009: The federal government will introduce legislation as early as the first week of December 2009, to implement the HST in BC. The NDP said they will vote against it and have called on federal Liberals to do the same. "I'll decide in my own sweet time," Liberal Leader Michael Ignatieff was quoted as saying Nov.27, 2009. Because the vote is not a matter of confidence, the government will not fall should the House of Commons vote down the HST for BC. See story in Times Colonist.

December 5, 2009: The federal government voted to approve a ways-and-means motion on December 3, 2009 that clears the way for the HST. That move allowed the federal government to introduce legislation to enable BC and Ontario to impose the tax which (in BC) combines the current 5% GST and 7% PST. An Ipsos-Reid poll released December 4 showed 82% of BC residents as opposed to the tax. "People in BC are outraged about the HST, and rightly so," said the BC director of the Canadian Taxpayers Federation, Maureen Bader. "It represents a $2 billion tax burden shift from business to consumers." A similar survey by the BC Restaurant and Foodservices Association (representing an industry that may be the hardest hit by the tax) showed 79% of BC residents as opposed to the tax.

December 9, 2009: The House of Commons passed legislation enabling the provinces to harmonize their sales taxes with the federal GST, clearing the way for Ontario and BC to implement the HST in summer 2010. The federal HST bill passed by a vote of 253 to 37. Only the NDP opposed the legislation. Earlier this week Dr. Keith Martin, MP for the riding of Equimalt-Juan deFuca, said he would not show up for the vote.

December 10, 2009: The BC Restaurant and Foodservices Association is preparing to openly fight back against the imposition of the harmonized sales tax. This follows months of talks with the BC government over measures to mitigate the impact of the tax. The restaurant industry claims that $750 million in business will be lost annually as fewer people dine out. Their new information website www.nomealtax.ca offers information and a petition for consumers. The BCRFA says the HST will not be cancelled but that restaurants and other food service providers should be exempt from charging the 12% tax when it comes into effect July 1, 2010.

March 9, 2010: The Canada Revenue Agency explained at an information seminar in Sooke that consideration of HST being payable begins May 1, 2010 (for any goods/services that will be delivered on or after July 1, 2010).

March 11, 2010: The federal NDP have provided an HST Calculator for consumers to determine how much more they will spend in a given year, once HST comes into effect.

March 31, 2010: The BC provincial NDP pledges to utilize every possible impasse to try and prevent the proposed HST from being implemented in BC. Leader of the official opposition, Carole James, NDP, set the tone on March 30 in the BC legislature, by forcing a standing vote, called division, during the introduction of a bill (by Finance Minister Colin Hansen) that would repeal the existing 7% provincial sales tax; that required all MLAs to stand and have their names read into the record. The government won, 47 to 34. Hansen wants the bill to pass by the end of April. Apparently 77% of people polled by Angus Reid earlier in March 2010 said they oppose the HST. [Notes from Times Colonist, March 31, 2010]

March 31, 2010: IMPACT OF THE HST. If the HST is introduced it will eliminate the existing GST and PST in the province of BC. With the HST, some things will likely cost more. Goods that are now exempt from the 7% PST will have the HST Added on, resulting in consumers paying 12% tax instead of the current 5% GST. Higher costs because of the HST will likely occur on: restaurant meals, personal services such as hairstyling, bicycles, and the private sale of vehicles, boats and aircraft. Taxes to be reduced as a result of the HST: provincial portion of the HST on accommodation reduced to 7% from 8%, provincial portion of HST on liquor reduced in restaurants to 7% from 10%. Measures to offset increased costs to some industries: point of sale rebates of the 7% portion on books, motor fuels, children's clothing and footwear, children's car seats, children's diapers, feminine hygiene products; provincial rebate and credit for the provincial portion of the HST payable on energy purchased for residential use; purchasers of new houses, costing up to $525,000, will be eligible to receive a rebate of 71.43% of the provincial portion of the HST, up to a maximum of $26,250. Houses over $525,000 will receive a flat rebate of $26,250 but the buyer pays the higher rate on the balance; a rebate for municipalities, charities and qualifying non-profit organizations so that, on average, they pay no more provincial sales tax under HST than under the current PST; a BC HST credit, paid quarterly with the GST and Low Income Climate Action tax credits, to offset the impact of the HST on those with low incomes. [Notes from Times Colonist, March 31, 2010]

April 6, 2010: PETITION / Become a canvasser. Bill Vander Zalm has stepped up the process to ultimately prevent/reverse the 12% HST that is currently set to take effect on July 1, 2010. Information available on a new website about the process of conducting a province-wide referendum. More info: Sign the Recall Vote Petition / Become a Canvasser. Also see Globe and Mail article, April 6/10.

April 14, 2010: The Fight HST campaign spearheaded by former premier Bill Vander Zalm needs petition signatures from 10% of registered voters in each BC riding. For the Juan de Fuca riding that means 3,490 signatures are required. Petitions are available to sign in several Sooke locations. Public meetings hosted by Vander Zalm will be held in Victoria at the Ocean Pointe Resort on Thurs. Apr.15, 7:30 pm; in Nanaimo at the Beben Park Rec Centre (2300 Bowen Road) on Fri. April 16 at 12 noon; and in Courtenay at the Upper Legion Hall (367 Cliffe Ave.) on Fri., April 16 at 7:30 pm.

April 17, 2010: Over 1,000 signatures were gathered in Sooke at a public signing event held 9 am to 7 pm at Sooke Community Hall.

April 24, 2010: Letter from Bill Vander Zalm (Apr.24/10) regarding the tally to date. His goal is to achieve 15% of the required signatures from each riding (as a safety margin over the required 10% by law with the Citizens Initiative).

April 29, 2010: "Totally out of control" is what Bill Vander Zalm calls a move by the BC Finance Minister (who aimed to launch a pro-HST campaign to possibly thwart public interest in signing the anti-HST petition circulating in BC), in a letter April 29, 2010.

April 29, 2010: BC Legislature votes the repeal of PST (making way for HST) into law, April 29, 2010. See Times Colonist story as carried in the National Post.

May 2, 2010: The FightHST campaign issues a letter May 2, 2010 to further encourage the repeal-HST process.

May 4 to 6, 2010: The Times-Colonist newspaper in Victoria carried two op-ed columns by key proponents of the political debate on HST: one from BC Finance Minister Colin Hansen (May 4/10) and a response by anti-HST leader Bill Vander Zalm (May 6/10).

June 29, 2010: In a tone of public acceptance, the Times-Colonist newspaper in Victoria carried several pages of HST coverage, giving detailed information about how the HST will be calculated, etc.

July 1, 2010: HST tax of 12% comes into effect in British Columbia, Canada.

August 15, 2010: BC Liberal MLA John Slater (one of 10 members of the Select Standing Committee for Legislative Initiatives), said on August 14 that he is willing to accept the petition submitted to his committee on August 13 by Fight HST leader Bill Vander Zalm. News release

August 20, 2010: BC Supreme Court Chief Justice Robert Bauman ruled today that the Initiative petition to end the HST in BC is a valid matter for the legislature, and gave the go-ahead to the Chief Electoral Officer to hand over the petition and draft Bill -- The HST Extinguishment Act -- to the legislative Standing Committee. News release

More HST news will be added to this digest page through to 2011. Send us your reports and updates.