Future Of British Columbia's HST To Be Known Soon

by Mike Godfrey, Tax-News.com, Washington

08 August 2011

British Columbians could discover the fate of their controversial and unpopular sales tax regime by the end of the month, with the results of a referendum expected to be declared on August 25.

According to media reports, Elections British Columbia hopes to be able to announce the results by that date. The final date will, however, depend on the volume of ballots received.

Voting closed on August 5, with the counting process expected to begin next week. The referendum will determine whether the harmonised sales tax (HST) remains in place. The tax was introduced last November, merging the provincial sales tax (PST) and general sales tax (GST), and generating a storm of criticism. As a result, the referendum was called, and its results will be binding on the government.

Were the tax scrapped, British Columbia would return to its previous system, with purchasers facing a 7% PST and a GST rate of 5%. However, were the HST retained, the government would lower the current 12% rate by 2%. This would take place in two stages, over the next three years, with the PST portion of the tax falling to 6% on July 1, 2012, and then dropping to 5% on July 1, 2014. To ease the process, taxpayers would receive one-off "transition cheques", worth CAD175 per child for families and CAD175 for seniors with annual incomes of up to CAD40,000.

According to Finance Minister Kevin Falcon, the tax is "right for the province", as it is simpler and more progressive than the old PST/GST system and allows businesses to save money and create jobs. On the other hand, the opposition has argued that the tax costs British Columbia's families an average of between CAD750 and CAD1,000 more in taxes each year.

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