PST in BC – Better news for the Construction and Food Industry

pst in bc better news

The PST (Provincial Sales Tax) has been in effect for almost a month now, and we have heard mixed reviews from many of our clients. One thing we have noticed is that our clients from the construction and food industries have had an overwhelmingly busy month. It seems as though their customers have been waiting to start eating out and beginning those major bathroom and kitchen renovations until the 12% HST was reduced back to the 5% and 7% GST and PST.

Mark von Schellwitz, Western Canada vice-president of the Canadian Restaurant and Food Services Association believes that many customers have in fact been waiting out the HST, stating “April 1st was incredibly important for us, and we are hoping the 2.7 million people we serve every day will celebrate the return to food-tax fairness by spending more in their local restaurants. All restaurant meals became 7% cheaper on April 1st.Similar to the food services industry, construction has been effected in much of the same way. The BC government charges the Provincial Sales Tax on materials purchased for a project, but has offered exemptions to home owners who are in need of construction services, transportation services, or professional services.

To put this into perspective, below is an example of how the HST and PST/GST differ in terms of a basic construction contract:

In essence, home owners no longer pay 7% on new home purchases, and renovation contractors now only have to charge the 5% GST instead of the 12% HST for their services (including carpentry, plumbing, and electrical wiring).

This has created an influx of work from customers who have prolonged their projects while waiting for the return of the PST. This, combined with the upcoming summer, has given many construction workers and restaurant owners an excuse to smile.

What now? Rob Currie, co-owner of Basement Systems Vancouver, believes that the Provincial and Federal government should re-implement a renovation tax credit to BC home owners, as it would greatly impact the amount of work in the construction industry, allowing for an even more substantial boost to the marketplace. As for now, it seems as though the restaurant and construction industries are back on track in BC, which brings optimism to many for the summer of 2013.