BC Extends HST Referendum Deadline

by Mike Godfrey, Tax-News.com, Washington

05 July 2011

To deal with the effects of a nationwide postal strike, British Columbia has extended the voting deadline in a crucial referendum that will determine the future of the province's sales tax regime.

Acting Chief Electoral Officer Craig James said he had ordered the referendum timeline to be extended, in order to compensate for the effects of the Canada Post labour dispute. The referendum is being held to decide the future shape of the sales tax system in the province, which was amended only last year.

An unpopular harmonised sales tax (HST) was introduced in July, 2010, blending the 7% provincial sales tax (PST) with Canada's federal general sales tax (GST), set at 5%, resulting in an overall rate of 12%.

The move caused widespread controversy, and, following a major petition, the referendum was announced.

In a bid to boost support for the tax ahead of the referendum, the Finance Ministry recently pledged that, were the system retained, it would slash the rate by 2%. This would take place in two stages, over the next three years. The PST portion of the tax would fall to 6% on July 1, 2012, and then drop to 5% on July 1, 2014.

One-time "transition cheques" would then be given to families with children under the age of 18, worth CAD175 per child. The cost of such cheques is estimated at CAD200m (USD208m), and, pending the results of the referendum, would begin to be issued at the end of the year.

The deadline for postal votes has now been extended to August 5. Electors have until July 22 to request a voting package. The changes are expected to affect 71 electoral districts.

The referendum asks voters to answer yes or no to a question on whether to "extinguish" HST and reinstate the PST/GST regime. Its results will be binding, but it is not yet known when the results will be expected, given the postal dispute.

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