itsyour decisionhstgstpst
TRANSCRIPT
8/6/2019 ItsYour DecisionHSTGSTPST
http://slidepdf.com/reader/full/itsyour-decisionhstgstpst 1/28
HST or PST/GST?
IT’S YoUr DECISIoNTHE INDEPENDENT PaNEl’S rEPorT
MaY 4,2011
8/6/2019 ItsYour DecisionHSTGSTPST
http://slidepdf.com/reader/full/itsyour-decisionhstgstpst 2/28
Dar British Columbian,
You hav an important dcision to
mak this summr.
That’s whn you will vot in a provinc-
wid rrndum asking you and your llow
British Columbians to mak a choic — kp
th HST or rturn to th PST/GST.
Th rason or this rrndum is clar.
Last July 1, th provincial govrnmnt
brought in th 12 pr cnt Harmonizd Sals
Tax (HST). It blndd th svn pr cnt
Provincial Sals Tax (PST) with th v pr
cnt dral Goods and Srvics Tax (GST).
Thr was no public consultation with you
or othr British Columbians. Th rsult was
conusion, angr, political discontnt and aptition signd by hundrds o thousands o
citizns dmanding a rrndum to lt th
popl dcid.
This panl, and th rport you ar about
to rad, was born out o that public outcry.
W ar our citizns—an conomist, a
ormr B.C. auditor gnral, a bankr and a
ormr Albrta nanc ministr. Our job has
bn to indpndntly assss and prsnt
th positivs and ngativs o ach sals
tax systm.
Ovr th last dozn wks w’v spnt
hundrds o hours talking about ach sals
tax and rading submissions rom British
Columbians, associations and businsss.
W hav gathrd th bst inormation w
could nd to prsnt to you.
W’ll admit — It’s bn a struggl. Som
o th acts about th HST and PST/GST
ar crystal clar. Othr acts will tak tim
to mrg. Tax policy is complx and it’s
not always asy to arriv at black and
whit conclusions.
Th procss o prparing this rport has
shown us much o th dbat ovr th HST
and PST/GST rmains lld with actually
incorrct inormation. W bliv that bttr
inormation, including th good and th bad
about ach tax systm, is critical or thr
to b a succssul rrndum – no mattr
th rsult.
Citizns usually lav such tax policy
qustions to th provincial govrnmnt.
During this summr’s rrndum, BritishColumbians will mak history. You will dcid
th utur o th HST. Th qustion bor
you is:
Are you in favour of extinguishing the HST
(Harmonized Sales Tax) and reinstating the
PST (Provincial Sales Tax) in conjunction
with the GST (Goods and Services Tax)?
Yes or No
Our job isn’t to tll you how to vot. It is to
look at th acts and or our bst analysis.
Now it’s your dcision.
Sincrly,
8/6/2019 ItsYour DecisionHSTGSTPST
http://slidepdf.com/reader/full/itsyour-decisionhstgstpst 3/281
TaBlE oF CoNTENTS
WHY SalES TaxES MaTTEr 2
YoU, YoUr FaMIlY aND SalES TaxES 5
IMPaCT oN THE ECoNoMY, BUSINESSES aND JoBS 12
IMPlICaTIoNS oF GoING BaCk To THE PST/GST 18
rEPorT SUMMarY 21
PaNEl MEMBErS 22
rEFErENCES aND DaTa SoUrCES 24
SUBMISSIoNS rECEIVED BY THE INDEPENDENT PaNEl 25
IT’S YOUR DECISION
PAGe
8/6/2019 ItsYour DecisionHSTGSTPST
http://slidepdf.com/reader/full/itsyour-decisionhstgstpst 4/28
It’s air to say vry w o us lik to pay
taxs. espcially sals taxs.
Yt th truth is sals taxs mattr. Thy
hlp pay or th public srvics British
Columbians xpct — univrsal halth car,schools and univrsitis, policing, roads and
highways, to nam just a w.
British Columbians hav bn paying
sals taxs or ovr 60 yars. Thy ar a
oundation o th provincial budgt. This
yar sals taxs will rais almost twic as
much as th rvnus rom our orsts,
minrals and nrgy. Rvnu rom th
sals tax quals th total incom taxs paidby individuals.
I B.C. liminatd th sals tax — whthr
it’s th HST or PST/GST — thr would
b a $5-billion to $6-billion hol in th
$41-billion budgt. To compnsat th
govrnmnt would nd to incras thdcit, rais othr rvnu or cut spnding
on srvics. Or do a combination o
all thr.
Th govrnmnt’s job is to nd th right
mix o tax and othr rvnu options to
und public srvics that ar ssntial to
our quality o li. Th govrnmnt must
dvis a rvnu plan that passs th
tst o airnss and kps our conomy
comptitiv, growing and crating jobs.
2
HoW THE ProVINCE raISES MoNEY2011/12 – $41.3 BILLION
WHY SalES TaxES MaTTEr
Natural Resources
Other RevenueOther Tax
HST
18%
14%
14%
14%
8%
7%
4%
21%
Personal Income Tax
Corporate Income Tax
Crown Corporations
Federal Transfers
“British Columbians need to recognize that although nobody like taxes, government needs to raise taxes in order to provide the services that we all need.” anne agie
IT’S YOUR DECISION
Source: B.C. Budget (201
8/6/2019 ItsYour DecisionHSTGSTPST
http://slidepdf.com/reader/full/itsyour-decisionhstgstpst 5/28
It’s a constant balancing act.
I incom tax and sals tax rats ar too
high, popl may mov away or th numbr
o popl moving to B.C. will dclin. High
sals taxs dampn spnding and that slowsth conomy.
I businss tax rats ar too high, thy’r
a drag on th conomy, chasing away
invstmnt and making it dicult to compt
in markts byond our bordrs. That mans
wr jobs.
evry govrnmnt has its own ways o raising
rvnus. All provincs — xcpt nrgy-rich
Albrta — rly on sals taxs as an importantsourc o rvnu.
Thr’s anothr prssur acing govrnmnts
— our population is aging.
Baby boomrs ar ntring thir rtirmnt
yars, a tim whn mploymnt incom
drops. That mans a dclin in incomtax paymnts at th vry tim thir us o
xpnsiv public srvics—spcially halth
car—bgins to ris. Just as th prcntag
o rtiring British Columbians is rising, th
prcntag o working citizns—paying
taxs on mploymnt incom—is dropping.
That will crat a unding crunch or th
govrnmnt ovr tim.
W’r alrady sing signs o th problm.Spnding on halth car in B.C. is growing
mor than twic as ast as th govrnmnt’s
rvnu growth. This trnd is xpctd to
incras as baby boomrs ag.
3
HoW THE ProVINCE SPENDS MoNEY2011/12 – $41.9 BILLION
Health
42%
27%17%
8%6%
Other
Interest on Debt
Social Services
Education
“We continue to be extremely dismayed with the introduction and thoughtless implementation o the HST at a time when the Canadian economy was adversely aected by the USA andinternational fnancial market melt-down.” rbet lintte – lintte Pjects Inc
Source: B.C. Budget (2011)
8/6/2019 ItsYour DecisionHSTGSTPST
http://slidepdf.com/reader/full/itsyour-decisionhstgstpst 6/28
“As a consumption tax the HST is efcient. There are no loopholes, exemptions or specialinterest groups or deductions.” Pu Mce, a & a Tding ltd
I govrnmnts ar to adquatly und
public srvics and avoid cutbacks, tax
hiks or dcits that add to provincial dbt,
thy must hav rliabl and robust sourcs
o rvnu.
It’s also important to not th mak-up o
th B.C. conomy, lik othr provincs, has
changd. Whn th PST was introducd
in 1949, it was a tax lvid mainly on
an conomy thn dominatd by th
manuacturing o goods.
Ovr th dcads w’v volvd into a
mixd conomy, on that still crats
goods but has sn th rapid xpansion
o srvics. Undr th PST, much o th
srvic conomy wnt untaxd. Undr th
HST, most srvics ar taxd. That mans a
broadr tax bas and a mor stabl sourc
o rvnu or govrnmnt.
On thing is clar— sals taxs ar ssntial
to th B.C. govrnmnt’s rvnu bas.
Whthr you vot to rturn to th PST/GST
or kp th HST, thr will still b a sals
tax in B.C. atr th rrndum.
Sales Tax Personal Income Tax Natural Resources Federal TransfersOther
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 10
ONTARIO
MANITOBA
ALBERTA
B.C.
SASKATCHEWAN
QUEBEC
NEW BRUNSWICK
NOVA SCOTIA
P.E.I.
NEWFOUNDLAND
HoW ProVINCES raISE rEVENUEPeR CeNT OF TOTAL ReVeNUe – 2010/11
4
Source: Provincial Budgets (2011
8/6/2019 ItsYour DecisionHSTGSTPST
http://slidepdf.com/reader/full/itsyour-decisionhstgstpst 7/28
It’s bst to stat th act: Th majority o
British Columbians ar paying mor at
th cash rgistr sinc th introduction o
th HST.
Atr studying th numbrs and consulting
with conomists, hr’s what w’v
concludd:
• Bitish Cumbin miies py n
vege $350 me evey ye n
utine ependitues unde the HST
•The me yu spend, the me HST yu
py The me yu en, the me yu’e
iey t spend
• I yu miy is ne the 15 pe cent
BC miies tht ept incme
ess thn $10,000 ye, yu’e ctuybette unde the HST
• a BC tpyes’ HST csts e ptiy
set thugh incme t eie
• ove 80 pe cent yu husehd
spending is ted s it ws bee
the HST
•The HST wi s cst yu me i yu
buy newy buit hme tht is wth
me thn $525,000
WHaT’S CHaNGED aT THE CaSH
rEGISTEr?
Bor last July 1, th v pr cnt dral
Goods and Srvics Tax (GST) and svn
pr cnt Provincial Sals Tax (PST) wradministrd as two sparat sals taxs.
Atr July 1, both th PST and GST wr
blndd into th 12 pr cnt Harmonizd
Sals Tax (HST).
THIS IS WHaT IS NoW HaPPENING aT
THE CaSH rEGISTEr
•17 pe cent yu spending hs n et
seven pe cent ses t
• 29 pe cent yu spending is subject
t the sme tt ses tes s bee It
hs nt gne up dwn
• 54 pe cent yu spending is nt
tbe unde the HST the PST/GST
Nthing hs chnged
YoU, YoUr FaMIlY aND SalES TaxES
Sinc th HST was introducd you’v hard a lot o
conficting statmnts.
‘The HST is csting me nd Bitish Cumbins me
thn the PST/GST did’‘Thee’s ey n chnge I might even be bette
thn bee’
“I fnd the basics o this tax sound, but it has been enlarged to cover [restaurant and snack] ood, [adult sized] clothing or children and a couple o other items. Please consider a simple change back to original basics.” Bi lwence, Dwsn Cee
5
8/6/2019 ItsYour DecisionHSTGSTPST
http://slidepdf.com/reader/full/itsyour-decisionhstgstpst 8/28
WHaT’S CHaNGED aT THE CaSH rEGISTEr?
29%
17%
Not taxable under HST or PST/GST
Taxable under HST and PST/GST
Newly taxable under HST
54%
So THIS IS a Tax SHIFT To CoNSUMErS?
Ys, but thr is a bnt to you and th
provincial conomy.
W all know that to mak a product or
srvic, businsss pay or itms lik powr,
hat, rnt and computrs. Undr th PST,
businsss paid th svn pr cnt sals taxon thos purchass. Whil you nvr saw
it on your bill most o that PST was addd
onto th nal pric you paid at th cash
rgistr. Call it th invisibl PST paid by you,
th consumr.
Undr th HST systm that’s changd. Most
businsss rciv a ull rbat on sals tax
paid on itms thy buy to mak a product or
srvic. That mans thy no longr add th
invisibl PST to th nal pric thy charg
you. Businsss can pass on thir HST
rbats to you in th orm o lowr prics or
us thir savings to invst in nw quipmnt
and productivity. This should gnrat
conomic growth, which th panl discusss
in th nxt chaptr.
“Since the implementation o the HST seniors eating at our senior center now have to pay the HST. This has cut down on the attendance to our meal program.”kthy Ndin, Pince Gege
6
Source: B.C. Ministry of Finance
8/6/2019 ItsYour DecisionHSTGSTPST
http://slidepdf.com/reader/full/itsyour-decisionhstgstpst 9/28
WHaT’S CHaNGED, aND WHaT HaSN’T, BETWEEN THE HST aND PST/GST
7
SPENDING CaTEGorIES ExaMPlES
UNCHaNGED – Itms that
ar not taxd undr ithr
th HST or th PST/GST
•Rnt
•Mortgag paymnts
•Basic grocris
•Child car xpnss
•Prscription drugs
•Public transit
•existing housing
UNCHaNGED – Itms
that wr taxd with th
5% GST plus th 7% PST
and ar now chargd th
12% HST
•Almost all houshold goods such as cars, urnitur, lctronics
and appliancs.
•Almost all clothing, ootwar and bauty products.
UNCHaNGED – Itms
taxd with th 5% GST
but xmptd rom th
provincial portion o th
HST by th Provinc.
•Motor uls
•Books
•Childrn-sizd clothing and ootwar
•Childrn’s car sats and car boostr sats
•Childrn’s diaprs
•Fminin hygin products
•Hom nrgy us
CHaNGED – Routin
spnding that usd to b
taxd with th 5% GST
but is now taxd th
12% HST
•Rstaurant mals and snack ood
•Hairdrssing and manicurs
•Most rcration itms such as movis, gym mmbrships
and magazins
•Maintnanc and rpair srvics not taxd undr PST (.g. gardning)
•Bicycls
•Tobacco products
•Prossional srvics
CHaNGED – Non routin
spnding that usd to b
taxd with th 5% GST
but is now taxd th
12% HST
•Nwly built hom sals (lss rbat)
•Convyancing costs such as raltor commissions
•Structural hom rnovations
•Structural hom rpairs
Source: B.C. Ministry of Finance
0%➔0%
5%➔5%
5%➔12%
5%➔12%
5%+7%➔12%
THEN NoW
8/6/2019 ItsYour DecisionHSTGSTPST
http://slidepdf.com/reader/full/itsyour-decisionhstgstpst 10/28
WHY Do YoU THINk BUSINESSES WIll
PaSS oN THEIr HST Tax rEBaTES
To ME?
Critics o th HST hav suggstd businsss
do not pass through thir HST savings to
th consumr. Howvr, xprinc in othr
jurisdictions shows, ovr tim, comptition
orcs businsss to pass on ths HST
savings to consumrs. I thy don’t, thy
los customrs.
Whn Canada’s Atlantic provincs adoptd
th HST in 1997, thr was an arly incras
in infation. It was tmporary, howvr. Atr
looking at th xprinc o othr jurisdictions
that adoptd valu-addd taxs such as th
HST, our assumption as a panl is 90 pr
cnt o businss’ HST rbats ar passd onto th consumr.
WHaT PrECISElY IS THE ToTal Tax
SHIFT To THE CoNSUMEr?
Atr carul considration, th panl has
concludd that in 2011/12:
•Becuse me things e ted thn
bee — incuding newy buit hmes —
miies nw py tt $133 biinme in ses t te HST ebtes nd
t bes e ten int ccunt
•Businesses wi py but $730 miin
ess in tes
8
“For B.C.’s businesses to remain competitive, a value-added sales tax, like the HST,is a necessity.” Institute Chteed accuntnts
WHaT IS THE ToTal Tax PaID BY FaMIlIES aND BUSINESSES?
Tt PST Tt HST less HST rebtes nd T Bes Dieence
(Biins ds)
Familis 3.81 5.14 -0.41 1.33
Businss 0.85 0.12 -0.73
WHo PaYS THE HST (BY INCoME BraCkET)
Source: Statistics Canada
Source: B.C. Ministry of Finance and Panel Estimates
8/6/2019 ItsYour DecisionHSTGSTPST
http://slidepdf.com/reader/full/itsyour-decisionhstgstpst 11/28
THE HST rEBaTE – SoME ExaMPlES
9
“The [low-income] credit largely o-sets the higher HST costs or the poorest BritishColumbians, but its early and quick phase-out means that many modest and middle-income households will be acing higher costs.” Cndin Cente Picy atentives
HoW MUCH MorE DoES THE aVEraGE
FaMIlY PaY UNDEr THE HST?
Th avrag amily paid $1,169 a yar in
sals tax undr th PST/GST. Undr th
HST, that amily now pays $350 mor in
sals tax.
But vry amily pays dirnt amounts osals tax dpnding on how much thy arn
and what thy buy.
A gnral rul o thumb is high-incom
arnrs, who spnd mor, will pay mor
sals tax undr th HST.
Thos who arn lss spnd lss and pay lss
sals tax.
Th lowst incom arnrs ar shildd rom
th mov to th HST through a sris otax rbats.
HoW Do Tax BrEakS or rEBaTES
For CoNSUMErS Work UNDEr
THE HST?
To cushion th ct o th HST th
provincial govrnmnt introducd two
masurs that giv back mony to
individuals and amilis.
Th rst applis to vry taxpayr. Th
govrnmnt incrasd provincial incom
tax xmptions to hlp popl adjust to th
HST. It’s $80 pr yar or singl taxpayrs or
$160 or a coupl.
Th scond HST tax brak applis i you’r a
low-incom amily. It’s th HST tax rbat —
a chqu maild to you vry thr months.
It tops out at $230 pr amily mmbr and
scals back as your incom riss.
*Income is ‘adjusted income’ as calculated for income tax purposes
Source: B.C. Income Tax Act
Fmiy Size Fmiy Incme* HST rebte
1 $20,000 $230
1 $25,000 $30
3 $20,000 $690
3 $30,000 $490
3 $40,000 $90
8/6/2019 ItsYour DecisionHSTGSTPST
http://slidepdf.com/reader/full/itsyour-decisionhstgstpst 12/28
“Since more goods and services are taxed under the HST than the PST, consumers ace an additional tax burden. Some o the goods and services taxable under the HST but not under the PST are, in no particular order, postal services, taxis, unerals, real-estate commissions, haircuts, parking, and restaurant meals.” Hemut Pstic, Cent 1 Cedit Unin
I yu Fmiy* MesYu Net Incese ateIncme T rebtes
Net Incese s % Fmiy Spending
<$10,001 -73 -0.7%
$10,001 – $20,000 32 0.1%
$20,001 – $40,000 129 0.4%
$40,001 – $60,000 366 0.8%
$60,001 – $80,000 527 0.9%
$80,001 – $100,000 657 0.9%
>$100,000 1,029 1.0%
avege $350 0.7%
HST IMPaCT aFTEr Tax rEBaTES
10
CaN YoU GIVE US SoME rEal-lIFE
ExaMPlES oF WHaT a FaMIlY PaYS
UNDEr THE HST?
I your amily* has an incom o lss than
$10,000 a yar (as 15 pr cnt o B.C.
amilis do) you ar rciving HST rbat
chqus in th mail. It mans th $216
in sals tax you paid undr th PST/GST
systm has actually dcrasd by $73 a
yar, to $143.
I you and your amily ar at th highr nd
o th incom scal — making mor than
$100,000 a yar — you pay th most. Th
HST adds $1,029 a yar to th $2,738 in
sals taxs paid undr th PST/GST.
Most amilis will b somwhr in btwn
this rang undr th HST.
Th $350 avrag sals tax pr amily dos
not includ th HST you now pay whn you
buy a nwly built hom. How much that
costs varis rom amily to amily, sinc not
vryon buys a nwly built hom. Som
prr pr-ownd homs that ar HST
xmpt. Thos amilis that do buy nwly
built homs pay dirnt prics, a choic thatdtrmins th amount o HST paid.
Hr’s an xampl: I you buy a nwly built
hom worth $685,000 (th mdian singl
amily hom pric in Mtro Vancouvr) you’r
paying $8,000 mor sals tax than undr
th PST/GST. I your nwly built hom costs
undr $525,000 you’r paying no mor sals
tax than you did bor.
Source: Statistics Canada, B.C. Ministry of Finance and Panel estimates
*A family includes one or more individual B.C. taxpayers.
8/6/2019 ItsYour DecisionHSTGSTPST
http://slidepdf.com/reader/full/itsyour-decisionhstgstpst 13/28
“[M]y husband and I have noticed the extra costs o eating out, hair cuts and ood purchases other than basic items and so on. But we also understand the huge cost to rescind the HST.”Mjie nd an Nevisn, Victi
WHaT’S HaPPENED aT THE CaSH
rEGISTEr DUrING THE FIrST YEar oF
THE HST?
It will tak tim to ully judg th impact o
th HST. B.C.’s Consumr Pric Indx shows
an initial spik o 1.1 pr cnt in th rat o
infation rom Jun to July, whn th HST
was introducd. That was highr than th
national infation rat o 0.5 pr cnt or th
sam priod.
B.C.’s ovrall infation rat is now clos to
th national rat.
In summary, undr th HST th avrag
amily pays mor in sals taxs. Low-
incom amilis ar shildd rom th HST.
High-incom and middl incom amilis
pay mor bcaus thy spnd mor. And
whil th cost o most goods and srvics
wnt up in th rst months o th HST, th
rat o infation now tracks clos to th
national avrag.
Tax PaYaBlE oN NEWlY BUIlT HoMES
CoNSUMEr PrICE INDEx
Provincial Portion of the HST
$0
$10,000
$20,000
$30,000
$40,000
$50,000
Previous Invisible PST
$ 3 0 0
, 0 0 0
$ 4 0 0
, 0 0 0
$ 5 2 5
, 0 0 0
$ 6 0 0
, 0 0 0
$ 7 0 0
, 0 0 0
$ 8 0 0
, 0 0 0
$ 9 0 0
, 0 0 0
$ 1, 0 0
0, 0 0 0
11
Source: B.C. Ministry of Finance
Source: B.C. Stats
8/6/2019 ItsYour DecisionHSTGSTPST
http://slidepdf.com/reader/full/itsyour-decisionhstgstpst 14/28
“A reality that has seldom been mentioned in the HST debate is that the provincial government actually has relatively ew policy levers available to attract investment, oster the growth o high-paying private sector jobs, and enhance B.C.’s competitiveness. The design o the consumption tax regime is one area where the province has the capacity to shape the economic environment in a positive way.” Business Cunci Bitish Cumbi
Atr consulting conomists and rading
a wid assortmnt o studis, including
on th panl commissiond, hr ar
our conclusions:
•Vituy ecnmic nysis fnds
the HST inceses ecnmic gwth,
pductivity, wges nd the quity
jbs
•Thee is n cnsensus n the vue nd
timing thse benefts
• a mve bc t the PST/GST wi ieyhve negtive impct n business
nd invest cnfdence becuse
uncetinty ve t picy
•The pne’s cmmissined nysis
cncudes the ecnmy wi get bigge
bst unde the HST thn it wud unde
PST/GST Unde the HST, the size theecnmy wi be $25 biin ge in
2020 thn it wud hve been with the
PST/GST Tht’s but 11 pe cent
highe gwth
• Sm nd ge businesses sve t est
$150 miin in dministtive csts
becuse they nw cmpy with ne t,
nt tw
• Businesses such s estunts ndhi sns, ecetin/entetinment
businesses nd buides newy buit
hmes, hve seen n initi negtive
impct n ses unde the HST
• Bns, cedit unins, insues, dcts
nd ent ptment wnes e hut
unde the HST becuse they hve t
py HST n items they buy t pvide
sevices Hweve, they dn’t quiy HST ebtes s d the cmpnies
IMPaCT oN THE ECoNoMY,BUSINESSES aND JoBS
I
you’r having troubl guring out th HST’s impact
on th conomy, you arn’t alon. W hard widly
divrgnt viws rom conomists, businss groups
and citizns.
‘… the HST is the singe mst imptnt thing tht cn be
dne t hep gw the BC ecnmy, ceting 100,000
me jbs’
‘ … the HST wi be the deth ne t sme
businesses nd my even esut in the BC ecnmy
sighty shining’
12
8/6/2019 ItsYour DecisionHSTGSTPST
http://slidepdf.com/reader/full/itsyour-decisionhstgstpst 15/28
WHaT IS THE IMPaCT oF THE HST aND
PST/GST oN THE ECoNoMY?
W hard a rang o dirnt answrs on
th conomic bnts o th HST vs. PST/
GST. Th panl commissiond its own
analysis o th impact o going back to th
PST/GST. Our indpndnt analysis ound:
•a etun t the PST/GST wud me
BC epts ess cmpetitive nd dmpen
business investment
•I the HST system cntinues, the
ecnmic benefts wi buid swy
•I the HST is et in pce, by 2020 it
wi esut in:
•a $25-biin incese in the
tt ecnmy
•11 pe cent in highe gwth Tht’s
but $480 pe pesn $830 pe
miy
•a u pe cent bst t investment in
mchiney nd equipment
•a $12-biin bst in dditin
epts, but 12 pe cent highe
thn it wud hve been unde the
PST/GST
•24,400 me jbs thn unde the
PST/GST, ne pe cent incese in
tt empyment
economic orcasting – spcially ovr
10 yars – is an imprcis xrcis.
Nonthlss, th panl blivs this analysis
is a rasonabl prdiction o improvd
conomic prormanc as a rsult o th
mov to th HST.
13
IT’S YOUR DECISION
“[I] we purchase a hal-million-dollar machine the tax we get back will actually pay or a new pickup or the operator to drive to work on the machine. The tax we save on the pickupwill pay the wages or an operator to run that machine or the month...”Mnty Hussey, Tit Cntcting
8/6/2019 ItsYour DecisionHSTGSTPST
http://slidepdf.com/reader/full/itsyour-decisionhstgstpst 16/28
“Some o our members build single amily residential homes and that sector has seen a slowdown which may at least in part be due to the HST and the uncertainties surroundingits longevity.” BC Cnstuctin asscitin
HoW DoES THE HST IMPaCT
INVESTMENT IN BC?
Thr’s littl doubt th HST crats a
climat that avours mor invstmnt
by businss.
For on thing, rmoving th PST rom
invstmnt in buildings and all machinrymaks thm lss xpnsiv. That’s an
incntiv to modrniz that improvs
productivity and comptitivnss and
crats bttr paying jobs.
Considr th construction industry, which
crats on in 12 jobs in B.C. Rmoving
th PST on itms lik construction matrials
liminats costs qual to about ight pr
cnt o th industry’s contribution to th
provincial conomy. That maks it chapr
to build and ncourags mor construction.
According to our conomic analysis,
undr th HST invstmnt in machinry
and quipmnt is xpctd to incras by
our pr cnt by 2020. Non-rsidntial
construction is xpctd to incras by
1.4 pr cnt.
Howvr, th switch to th HST is rgardd
lss avourably by nw hom buildrs.
Homs thy build now ac th 12 pr cnt
HST, not just th v pr cnt GST undr
th prvious systm. For thos paying mor
than $525,000 or a nwly built hom, it
mans paying mor sals tax than bor.
Som o that impact will b diminishd bylowr construction costs that will rduc
th pric. But th sals tax costs o buying
a nwly built hom with a pric tag abov
$525,000 ar now highr.
Our analysis suggsts this ngativ impact
o th HST will b short-livd. By 2014,
rsidntial construction will ris bcaus th
HST systm will incras conomic activity,
wags and jobs. By 2020, rsidntialconstruction will b 1.9 pr cnt highr
undr th HST than it would hav bn
undr th PST/GST.
MoNTHlY HoUSING STarTS IN BC aND CaNaDa
14
Source: Statistics Canada
8/6/2019 ItsYour DecisionHSTGSTPST
http://slidepdf.com/reader/full/itsyour-decisionhstgstpst 17/28
“To give an example o how onerous the administrative work was... when we bought a can o methyl alcohol to thin paint and clean our equipment, the portion used to thin the paint was tax exempt, the portion to clean the equipment was taxable.”Ed Benge, Hnsen Industies
HoW DoES THE HST IMPaCT ExPorTS?
B.C. rlis on xports to crat jobs and
grow our conomy. Th HST is an advantag
to companis that sll goods and srvics
byond our bordrs.
Why? Most xport prics ar st globally.
Canadian xportrs produc as much asthy can protably sll at thos prics. Th
HST lowrs th cost o production, maning
xportrs can produc mor with thir
invstmnt in a businss. That mans mor
rvnu, mor sals and mor jobs.
This HST advantag to xportrs — whthr
thy ar xporting srvics or goods such as
coal or lumbr products — bnts both our
rural and urban conomis.
It works somthing lik this. A lumbr
producr in Princ Gorg, a min in
southast B.C. or a movi producr in
Vancouvr, or xampl, no longr hav
to pay sals tax on itms lik lctricity,
hating ul, computrs and vhicls
usd in production. This puts thm on
th sam ooting with th mor than 140
othr countris that hav gon to valu-
addd sals taxs, such as th HST, tomak thir xports comptitiv in th
global marktplac.
WHaT IS THE EFFECT oN SMall
BUSINESSES?
Small businsss ar crucial to th
B.C. conomy. Firms o wr than
50 mploys account or:
•98 pe cent businesses
•Tw ut evey 10 pivte sect jbs
•41 pe cent epts
•one-thid the tt ecnmy
Th HST is a bnt to this important sctor
As xplaind arlir, th HST rmovs th
PST rom th cost o production. That maks
it chapr to produc goods and srvics,
hlping ovrall sals and xports.
Th HST also maks bookkping simplrand chapr or small businss. Complianc
with only on sals tax (HST) vs. two
(PST and GST) is particularly important
or small rms, which otn don’t hav th
sam administrativ rsourcs as largr
companis.
Som small businss ownrs s th
HST as a nw cost burdn. Itms such as
commrcial rnt, raw matrials and goodspurchasd or rsal or to b incorporatd
in a product now bcom subjct to sals
tax. Howvr, th HST paid by most small
businsss is ully rundd to thm.
Whthr you run a small stor, a rstaurant
or a prsonal srvics businss, it mans th
HST systm will dcras your costs.
15
8/6/2019 ItsYour DecisionHSTGSTPST
http://slidepdf.com/reader/full/itsyour-decisionhstgstpst 18/28
“The HST created a new provincial restaurant meal tax in British Columbia while theindustry’s closest competitor [basic ood purchased at grocery stores] remains completely tax exempt.” Cndin restunts nd Fd asscitin
HoW DoES THE HST IMPaCT SErVICE
INDUSTrIES SUCH aS rESTaUraNTS?
Th rstaurant industry has said th HST
hits it hard. Whn rstaurants startd
charging th ull 12 pr cnt HST, rathr
than just th v pr cnt GST, many
rportd a dclin in customr sals.
Thr’s no doubt thr’s bn som pain
or individual stablishmnts. Howvr,
Statistics Canada data shows rom Jun
2010 to January 2011 ovrall industry
sals incrasd by about thr pr cnt in
both B.C. and all o Canada.
British Columbia’s rstaurant sals ar
actd by many conomic actors, rom th
halth o a local conomy, to vnts lik th
Vancouvr Wintr Olympics to th rputation
o th rstaurant and th ood and bvrags
on its mnu.
What is clar rom conomic data is that
whil som individual rstaurant’s sals
wr hurt by th HST’s introduction, th
sctor’s total rcipts hav trackd with th
national avrag sinc July.
arE oTHEr BUSINESSES HUrT BY
THE HST?Som businsss, lik banks, crdit unions
and rsidntial landlords rciv no rbats
or th HST thy pay on th things thy
nd to run thir businss or produc goods
and srvics. Just lik consumrs, ths
businsss ac incrasd costs bcaus o
th HST. This mans that thy must absorb
th addd HST costs or pass thm on to
thir customrs.
B.C.
Canada
90.0
2010 2011
J F M A M J J A S O N D J
95.0
100.0
105.0
110.0
115.0
FooD SErVICES & DrINkING ESTaBlISHMENT SalES
16
Source: Statistics Canada
8/6/2019 ItsYour DecisionHSTGSTPST
http://slidepdf.com/reader/full/itsyour-decisionhstgstpst 19/28
“I am the most worried about the perception o instability that it would create around our province i the tax decision were reversed...” Jdn Gdsby, Fmiy Ministy Pst & owne Netep Medi ltd
WoUlD GoING BaCk To THE PST/GST
DaMaGE oUr rEPUTaTIoN?
Businsss and invstors lik stability
and crtainty in th tax policis govrning
th marktplac.
That mans uncrtainty ovr utur dirctions
in taxation, such as a sals tax, is likly tohav at last a tmporary impact on businss
invstmnt. Qustions about what may or
may not b subjct to a sals tax could also
dlay th dcisions o consumrs in making a
major purchas, hurting rtailrs.
WHaT HaS BEEN THE oVErall IMPaCT
oF THE HST oN THE ECoNoMY So Far?
It will tak tim to assss th ral impact o
th HST on th conomy. To dat w can say:
•Business cnfdence hs emined stbe
•ove, BC husing stts hve
emined cnsistent with the
ntin vege
•The estunt industy epted swe
gwth when the HST ws intduced
But ve ses gwth hs etuned t
the ntin vege
Our consnsus is th HST will b a nt
bnt to th conomy. But you shouldn’t
xpct dramatic rsults ovrnight. It’s a taxthat ors incrmntal bnts ovr tim by:
•Ming mst businesses me
cmpetitive
•reducing dministtive csts t
businesses
•reducing the cst pducing gds
nd sevices
•Ceting me jbs
Consumer
Business
0.0
2010 2011
F M A M J J A S O N D J F
20.0
40.0
60.0
80.0
120.0
140.0
100.0
17
Source: Conference Board of Canada and CFIB
CoNSUMEr aND BUSINESS CoNFIDENCE
8/6/2019 ItsYour DecisionHSTGSTPST
http://slidepdf.com/reader/full/itsyour-decisionhstgstpst 20/28
W can tll you this:
• Ging bc t the PST cn be dne —
just nt venight It wi te 18-24
mnths t g bc
•The fst ye ging bc t the PST/ GST wi esut in the pvince sing
me thn h--biin ds in evenue
Tht evenue gp wi incese ech ye
• Ging bc wi be epensive The
pvince wi pbby hve t epy
ottw the $16 biin it eceived t
tnsitin t the HST
• I the gvenment bwed $16
biin t epy ottw, it wud cst$85 miin ye in inteest bsed n
tdy’s inteest tes
•The gvenment wi spend $35 miin
ech ye t un new PST fce
•The pvince’s cnt ses t picy
wi emin gey the sme s it is nw
HoW loNG WIll IT TakE To Go BaCk?
No provinc has vr introducd th HST
and thn movd back to th PST. It can’t b
don quickly.
Th B.C. and dral govrnmnts nvrplannd or a rturn to th PST/GST systm
howvr, it is possibl to go back. Ocials
told us it will tak 18-24 months. That
includs rwriting dral-provincial tax
laws and rgulations, hiring back 300
tax collctors, rbuilding a provincial PST
oc and hlping businsss radjust thir
accounting systms.
IS GoVErNMENT raISING MorE MoNEY
UNDEr THE HST CoMParED To THE
PST/GST?
Ys. Th HST gnrats mor rvnu than
th PST/GST.
Whn th HST was introducd, th
govrnmnt xpctd in th rst yar th
xtra rvnus rom th HST would b
balancd out by tax braks and rbats.
That hasn’t happnd. Th HST is raising
mor rvnu in its rst yar than was
prdictd. With ach passing yar, th HST
will continu raising mor rvnu than
th PST/GST systm did bcaus it taxs a
broadr bas o goods and srvics.
I w go back to th PST/GST, th provinc
would s a sals tax rvnu loss o about
$820 million in th rst yar. That loss
would incras to $893 million in th
scond yar and would widn ach yar.
IMPlICaTIoNS oF GoING BaCk To THE PST/GST
W’v hard both sids o th argumnt around
th cost o going back to th PST/GST.
‘The HST is csh gb by gvenment With ste
pen the gvenment cn get id it, g bc t the PSTvenight, nd it wn’t cst dime’
‘The HST ises me mney pubic sevices Ging
bc wi te yes nd cete me debt’
18
“It took several months to fnalize the transitional rules beore the HST came into eect.We are concerned that it may take as much, i not more time, to develop transitional rules or removing the tax.” Ubn Devepment Institute
IT’S YOUR DECISION
8/6/2019 ItsYour DecisionHSTGSTPST
http://slidepdf.com/reader/full/itsyour-decisionhstgstpst 21/28
arE THErE oTHEr CoSTS oF GoING
BaCk To THE PST?
Ys.
I British Columbians dcid to go back to th
PST/GST, th B.C. govrnmnt would likly
hav to rpay th $1.6 billion that Ottawa
paid to hlp as B.C.’s shit to th HST.To pay or th rund, th B.C. govrnmnt
could borrow th $1.6 billion, cut spnding
or rais rvnu rom anothr sourc.
Borrowing th mony would cost taxpayrs
about $85 million a yar in intrst costs.
Anothr $15 million to $20 million in on
tim costs would nd to b spnt rbuilding
th PST tax oc and hiring back 300 tax
collctors and sta to collct PST again.Onc that’s don, it’s likly to cost about
$35 million a yar to run th PST tax
oc, administration costs now absorbd
by Ottawa.
arE THErE aNY SaVINGS For THE
GoVErNMENT IN GoING BaCk To THE
PST/GST?
Ys, thr ar savings to b had.
Th B.C. govrnmnt now pays HST rbats
to low-incom arnrs. Canclling thm
would rduc govrnmnt spnding by about
$232 million a yar.
Anothr $209 million would b savd
in th rst yar o going back i th
B.C. govrnmnt rvrss tax braks it
introducd to as consumrs into th
HST. That currntly givs vry taxpayr an
$80 tax brak.
So WHaT’S THE BoTToM lINE CoST To
THE GoVErNMENT oF GoING BaCk To
THE PST/GST?
Adding up th costs and th savings or
going back to th PST/GST, it mans
th provincial budgt would s a nt
rvnu loss o $531 million in th rst
yar and $645 million in th scond. That
trnd would continu ach yar, maning
othr rvnus would nd to b ound
or public srvics cut to avoid incrasing
utur dcits.
Going back to th PST/GST also has
consquncs or balancing th budgt.
Undr th currnt budgt plan, balancing
th provincial budgt would b dlayd by
at last on yar.
IMPaCT oF rETUrNING To PST/GST
19
“ . . . I do not think it is in the best interest o BC’ers to change back to PST/GST. First, because it would just cost we taxpayers more money to convert back and I don’t mean just businesses. We, the taxpayers, would have to pay or the bureaucracy to handle the paperwork to change back and also to rehire sta to handle PST again.” W Ngs, lngey
2013/14 2014/15
$ millions
Sals Tax Rvnu Loss 820 893
Rvnu Loss du toLowr economic Growth
32 80
Dbt Srvicing incras 85 85
PST Administration 35 35
Elimination of tax relief
HST Rbat -232 -232
Incom Tax Brak -209 -216
Net revenue lss 531 645
Source: B.C. Ministry of Finance
8/6/2019 ItsYour DecisionHSTGSTPST
http://slidepdf.com/reader/full/itsyour-decisionhstgstpst 22/28
8/6/2019 ItsYour DecisionHSTGSTPST
http://slidepdf.com/reader/full/itsyour-decisionhstgstpst 23/28
rEPorT SUMMarY
Th choic you ac on th HST and
PST/GST is a big on. It coms down
to balancing th savings you and your
amily will gt by going back to th PST
against th longr-trm conomic bntsthat staying with th HST will bring British
Columbians in th yars ahad.
Th immdiat impact o th HST on your
amily pocktbook is clar.
Unlss you ar among th 15 pr cnt o
amilis with an incom undr $10,000 a
yar, you’r paying mor sals tax undr th
HST than you would undr th PST/GST:
On avrag about $350 pr amily.And that dosn’t includ th HST you will
pay on occasional, big-tickt itms lik
buying a nwly built hous or putting on a
nw roo, which ar no longr xmpt rom
th PST.
I you vot to go back to th PST/GST,
all thos addd sals tax costs would
disappar. You will hav mor mony in
your pockt.That dcision, howvr, has longr trm
consquncs.
Going back to th PST/GST mans turning
away rom th gradual utur conomic
bnts xpctd with th HST. Thos
includ a simplr sals tax systm now
usd by mor than 140 othr countris
and a mor comptitiv conomy, whr
goods and srvics ar chapr to produc,boosting our xports, attracting invstmnt
and crating bttr-paying jobs.
Our panl acknowldgs it’s hard to put
concrt numbrs to ths utur bnts.
Howvr, our indpndnt analysis prdicts
staying with th HST will man a B.C.
conomy in 2020 that will:•B $2.5 billion largr than it would b
undr th PST. That’s about $480 pr
prson or $830 pr amily.
•Produc $1.2 billion mor in th xport o
goods and srvics.
•Crat an additional 24,400 bttr-paying
jobs.
In th contxt o a $200-billion conomy,
ths ar important—albit modst —bnts. But thy will mak B.C. mor
comptitiv in th global marktplac.
Your dcision also has srious ramications
or th provincial budgt.
Th HST taxs th growing part o our
conomy — srvics — and will provid
xtra rvnu to und hospitals, schools,
roads and othr important public srvics
you rly on. In contrast, moving back toth PST/GST will likly man runding th
dral govrnmnt $1.6 billion in transition
mony and, in th rst yar alon, put a
$531-million hol in th provincial budgt.
It’s not a simpl choic bor you. Our
indpndnt panl has givn you th bst
ovrviw w could to wigh th argumnts.
Now it’s your dcision.
21
IT’S YOUR DECISION
8/6/2019 ItsYour DecisionHSTGSTPST
http://slidepdf.com/reader/full/itsyour-decisionhstgstpst 24/28
JIM DINNING – CHaIr
Jim Dinning srvs as chair o th Canada
Wst Foundation and Wstrn FinancialGroup Inc. H is a chair and dirctor o a
numbr o public, privat and not or prot
companis and organizations. Until 2004,
Mr. Dinning was xcutiv vic prsidnt o
TransAlta Corporation. Prior to mid-1997,
h hld svral ky positions during his
11 yars as a mmbr o th lgislativ
assmbly in Albrta. O not is his srvic
as provincial trasurr rom 1992 to 1997.
Mr. Dinning is a graduat o Qun’sUnivrsity with two dgrs: a bachlor
o commrc in 1974 and a mastr’s in
public administration in 1977. H rcivd
an honorary doctor o laws dgr rom th
Univrsity o Calgary in 2002 and today,
srvs as chancllor o th Univrsity
o Calgary.
GEorGE MorFITT
Gorg Mortt is a graduat o th Univrsity
o British Columbia and a chartrdaccountant. Atr a 20-yar carr as chi
nancial ocr in th privat sctor in
Vancouvr, h srvd two trms as auditor
gnral o British Columbia. Mr. Mortt has
hld snior xcutiv positions in a numbr
o organizations, including: prsidnt, B.C.
Institut o Chartrd Accountants; chair,
Univrsitis Council o B.C.; and chair, UBC
Board o Govrnors. Mr. Mortt is a llow o
th B.C. Institut o Chartrd Accountantsand a Qun’s silvr and goldn jubil
mdalist. H currntly srvs as chair o
WorkSaBC and is a past dirctor o th
Motor Vhicl Sals Authority o B.C., th
B.C. Saty Authority and th Halth Council
o Canada. Mr. Mortt is an inductd
mmbr o th B.C. Sports Hall o Fam
and is past chair o Canadian Sport Cntr
Pacic. H currntly holds an appointmnt
as adjunct prossor at th Univrsity
o Victoria.
22
PaNEl MEMBErS
8/6/2019 ItsYour DecisionHSTGSTPST
http://slidepdf.com/reader/full/itsyour-decisionhstgstpst 25/28
TraCY rEDIES
Tracy Rdis is th CeO o Coast Capital
Savings – Canada’s third-largst crditunion outsid o Qubc with ovr 400,000
mmbrs. Ms. Rdis is also a dirctor
o Cntral 1 Crdit Union. Sh has ovr
20 yars o xprinc in th intrnational
nancial srvics industry and holds a BA
(doubl major in conomics and Asian
studis) rom th Univrsity o Victoria and
an MSc in businss administration rom
th Univrsity o British Columbia. Hr
banking xprtis spans th industry – romcommrcial, prsonal, and privat banking
to -businss, IT, and invstmnt srvics.
Ms. Rdis is a dirctor o th CD How
Institut, th Vancouvr Board o Trad
and C.H.I.L.D. – a Canadian oundation
ddicatd to nding a cur or Crohn’s
disas, colitis and othr gastric illnsss in
childrn. Ms. Rdis has bn rcognizd
as on o Canada’s top 100 mal
businss xcutivs.
JoHN rICHarDS
John Richards is a prossor in th school
o public policy at Simon Frasr Univrsity.Traind as an conomist, Mr. Richards has
writtn xtnsivly on public policy mattrs
in Canada and is widly rcognizd or his
contributions to public policy dialogu on
social policy in Canada. Prossor Richards
holds th Rogr Phillips chair in social
policy at th CD How Institut and has
bn widly rcognizd as on o British
Columbia’s lading conomists. His currnt
social policy ocus is on Aboriginal policy.H co-dits Inroads, a Canadian policy
journal, and h has undrtakn taching and
rsarch intrnationally ovr th last dcad
H also hads a policy institut linkd to
th Intrnational Univrsity o Businss
Agricultur and Tchnology in Bangladsh.
Prossor Richards also srvd as an NDP
Mmbr o th Saskatchwan lgislatur
rom 1973-1975.
23
8/6/2019 ItsYour DecisionHSTGSTPST
http://slidepdf.com/reader/full/itsyour-decisionhstgstpst 26/2824
8/6/2019 ItsYour DecisionHSTGSTPST
http://slidepdf.com/reader/full/itsyour-decisionhstgstpst 27/2825
SUBMISSIoNS rECEIVEDBY THE INDEPENDENT PaNEl
Fu submissins cn be eviewed
nine t: wwwhstinbcc
8/6/2019 ItsYour DecisionHSTGSTPST
http://slidepdf.com/reader/full/itsyour-decisionhstgstpst 28/28