BC Opposition Launches Anti-HST Campaign

by Mike Godfrey, Tax-News.com, Washington

08 June 2011

Ahead of a crucial referendum on the future of the province's harmonized sales tax (HST), British Columbia's official opposition party has launched its "yes" campaign, designed to persuade voters to scrap the tax in favour of a return to the previous regime.

On June 24, voters will be asked to vote yes or no in response to the following question: "Are you in favour of extinguishing the Harmonized Sales Tax and reinstating the PST (Provincial Sales Tax) in conjunction with the GST (Goods and Services Tax)?". Introduced in July, 2010, the HST blended the 7% PST with Canada's federal GST, set at 5%, resulting in an overall rate of 12%. The referendum was called in response to sustained pressure, with many arguing that the change had been implemented without prior electoral consent.

The official NDP opposition, led by Adrian Dix, has now set out its "yes" campaign, based on the argument that the tax has substantially increased the burden felt by families. According to figures provided by the party, a two-income family, in which each parent earns CAD50,000 (USD51,000) per year, pays approximately CAD1,000 more a year in sales tax. The "average" married couple with a child allegedly pays at least CAD735 more.

Not only this, but the NDP stress that the impact of the HST increases as children get older, with school supplies and adult clothing among those items charged at an extra 7%. This tax is added to "countless" items previously exempt from provincial sales tax, including home renovations, energy saving appliances and maintenance, certain health care services, travel, restaurant meals and real estate fees. Dix argues this means that, "everyday, families are feeling the HST in their pocket books: every time they buy a sandwich and a coffee, when their children go to summer camps or when they buy non-prescription drugs or vitamins."

Commenting on the campaign launch, Dix added: "The HST is a massive transfer of the tax burden away from big businesses and onto the backs of working and middle class families. Hundreds of items and services previously untaxed by the PST are now taxed at 7% under the HST. We can have more fairness for families without the HST. By removing the provincial sales tax on key items, we will give ordinary families some relief.”

The provincial government, headed by the Liberal party, recently succeeded in securing the passage of a parliamentary motion to reduce the HST. Were the referendum to result in its retention, Finance Minister Kevin Falcon has said it would then be subject to a two-stage reduction process. The cuts would apply to the PST portion, with the rate dropping to 6% on July 1, 2012, and to 5% on July 1, 2014. Under a new 10% harmonized rate, British Columbian families could expect to pay, on average, CAD120 less in tax annually, according to Falcon.

The government is also due to send out an HST Voters Guide to all householders, which will include a position statement by the administration. The results of the referendum, expected in August, will be binding.

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