You have probably heard the announcement made on July 23 by Premier Gordon Campbell and Finance Minister Colin Hansen about the implementation of an harmonized sales tax (HST) in British Columbia.
According to many economists, the introduction of HST is one of the most important actions the government can undertake to boost the economy in British Columbia, with benefits for both Small-Medium Businesses and consumers..
The HST will combine the 7% B.C. Provincial Sales Tax (PST) with the 5% federal Goods and Services Tax (GST), for a single sales tax rate of 12%.
Currently, PST is applied at every step in the creation of a product. Those multiple PST charges are embedded in the final price and in the final purchase price too. Under the proposed HST system, those embedded costs will be removed. Then, with the new harmonized tax, most taxes paid on business inputs are refunded to the business, and those savings can be passed on to consumers.That’s why families and consumers will benefit of a reduction in prices.
Business will benefit of a reduction of costs which is estimated to be over $2 billion. The construction industry will save $880 million, manufacturing and forestry sector will save $140 million; the transportation industry will remove $210 million in costs and $80 million will be saved in mining and oil and gas.
These savings will result in increased investments and productivity, enhanced competitiveness and lower prices, making B.C. one of the most competitive jurisdictions not only in Canada, but in the industrialized world.
For more information:
- Deloitte’s update on HST
- Yes Bc HST group on facebook
Reliable accounting services for your business.
Contact us or learn more about our reliable accounting services to see how we can help you with your year-end taxes and tax planning.
