Province of BC to harmonize the PST and GST on July 1, 2010

The Premier and Deputy Premier/Minister of Finance announced today that on July 1, 2010, there will be a harmonized tax of 12% in the Province of BC

The details:

It’s estimated the HST will remove over $2 billion in costs for B.C. businesses. That includes an estimated $1.9 billion of sales tax removed from business inputs, which enhances competitiveness, increases investment and productivity and, ultimately, increases prosperity. For example, some savings would include about $880 million for the construction industry, $140 million for manufacturing, $210 million for the transportation industry, $140 million for the forestry sector, and $80 million for mining and oil and gas. In addition, B.C. businesses will also save an estimated $150 million annually in compliance costs

Similar to PST exemptions, the B.C. HST will provide consumers with point-of-sale rebates on a number of products including gasoline and diesel fuel for motor vehicles, books, children’s-sized clothing and footwear, children’s car seats and car booster seats, diapers and feminine hygiene products

The proposed HST will include:
· Unlike any other province, B.C. will provide an automatic point-of-sale rebate so consumers do not have to pay the provincial portion of the HST at the pump for purchases of gasoline and diesel fuel for motor vehicles, including any biofuel components.
· A partial rebate of the provincial portion of the single sales tax for new housing to ensure that new homes up to $400,000 will bear no more tax than under the current PST system, while homes above $400,000 will receive a flat rebate of about $20,000.
· A refundable B.C. HST Credit paid quarterly with the GST and carbon tax credit to offset the impact of the tax on those with low incomes.
· A temporary delay in the provision of input tax credits for certain purchases by businesses with taxable sales in excess of $10 million.

The federal government will provide British Columbia with $1.6 billion in transitional funding in recognition of the improvement this change will make to business competitiveness in Canada. The full cost of administration will be borne by the federal government, saving the Province an estimated $30 million annually in administration costs. With this decision, the Province can now move forward and work with industry to implement the new HST.

Rebates and Tax Credits
To meet our unique requirements here in the province of British Columbia, the Harmonized Sales Tax would include the following point-of-sale rebates and tax credits for the provincial portion of HST:

· Fuel
o Gasoline and diesel motor fuels, including any biofuel components.
· Other items
o Books, children’s sized clothing and footwear, children’s car seats and car booster seats, diapers and feminine hygiene products.
· Housing
o A partial rebate of the provincial portion of the HST of up to $20,000 on all new housing.
· Low income tax credit
o A refundable B.C. HST Credit to help protect low-income individuals.

There will be rebates for municipalities, charities and eligible non-profit organizations to avoid tax increases for these sectors. And there will also be temporary restrictions of input tax credits for certain purchases by businesses with taxable sales over $10 million and financial institutions.

Agreements and Legislation
The Province of B.C. and the Government of Canada have signed a Memorandum of Agreement setting out their intention to establish an HST in British Columbia effective July 1, 2010. The agreement establishes a framework for the proposal, setting out key features such as the timing, the tax base, the rate and the flexibility available to the province.

Administration
The HST would be administered by the federal government in the same way that they now administer the GST and the HST in other HST provinces. The federal government would provide revenue to the province based on an allocation formula.

Some Organisations that Have Called for Harmonization

· B.C. Business Council
· B.C. Progress Board
· B.C. Chamber of Commerce
· Canada West Foundation
· Conference Board of Canada
· Chartered Accountants of British Columbia
· Retail Council of Canada
· Canadian Manufacturers and Exporters
· Certified General Accountants – British Columbia
· Certified General Accountants – Canada

As a resident of this Province, I believe the government has some communication work to do on this file as I'm not convinced, yet, how this is a "win-win" for the Province. But I look forward to the government explaining how this benefits us in the Cariboo-Chilcotin