Thanks to BC voters, British Columbia has taken a huge step backwards. BC will have to spend millions on returning to the previous GST/PST system as well as returning $1.6 Billion dollars to Ottawa.
Finance Minister Kevin Falcon said dismantling the HST and returning to the provincial sales tax will take time to do properly so residents should not expect a change overnight. In this referendum, 1.6 million voters — about 51 per cent of the registered voter base in B.C. — rejected the HST. Elections B.C. released on Friday results from the mail-in ballots from earlier this summer with 54 per cent voting to get rid of the HST and 46 per cent in favour of keeping the tax.
What does this mean for BC?
Well things such as haircuts and gym memberships will be cheaper but this also means some business see this as a step backwards in a economy where stepping back is a costly thing to do. Certain economies such as export and resource will be hit the hardest as under the HST, business receives a tax credit for costs, something that is not available under the PST. Mining will be hit but to what extent, remains unanswered, said Ben Chalmers of the Mining Association of B.C. The HST shaved $80 million a year in costs off goods and services purchased by the industry in B.C., he said.
“We are certainly concerned about the competitiveness of B.C. as a place to invest, He said. “Now B.C. is one of the only jurisdictions in Canada that doesn’t have a value-added sales tax. Now we know we are competing with places like Ontario, which has a much more efficient consumptive tax. That may be a factor in influencing people’s decisions on where they put their money.”
Another big bucks industry that could potentially be hit hard is the BC Film Industry as studios and producers could get the full HST back in a tax credit compared to only the PST under the GST/PST system. As well under the HST system tax self assessments were no longer necessary so in the end with the HST companies where getting all 12% of the tax back as well as saving in compliance costs which in a industry where every cent counts means a lot.
“The HST helped level the playing field in Canada’s nationwide motion picture industry and its loss will put B.C.’s industry at a significant disadvantage to our competitors.”
Now with the HST defeat, the film industry is forced to lobby to be exempt from the PST to be able to battle with Ontario and its film industry. “The hidden economic benefits are huge,” says Honey. “It’s a way bigger business than people realize.”
The question now is: Where do we go from here? How do we move forward to reinstate the GST and PST in the best possible way to make almost everyone and every industry happy with the results.