Independent Panel Offers Objective View on HST and Costs Associated with Return to PST

VANCOUVER, May 5 /CNW/ - The report by an independent panel that reviewed the advantages and disadvantages of the province's harmonized sales tax offers a fair and accurate analysis of the new value-added tax, Bruce Hurst, FCGA, the Chair of the Certified General Accountants Association of British Columbia said.

"The panel's comprehensive and balanced review of the HST shows that the tax will help boost our economy," said Hurst. The report noted that by 2020 it will add 24,400 better paying jobs, make our economy $2.5 billion larger than it would be under the PST, and produce $1.2 billion more in the export of goods and services. The Association has been a strong supporter of the HST as it will boost the province's competitiveness and makes good fiscal policy.

The report makes it clear that the issue of taxation is complex and rarely black and white. "The panel acknowledges that taxes are, in and of themselves, unpopular. But it is important for government to strike the right balance and to ensure a positive investment climate for job creation and economic growth while being able to adequately fund health-care, education and other programs," Hurst said.

"The introduction of the HST improves transparency and removes what had been a 'stealth' sales tax," Hurst noted.  "In the days of the PST, businesses paid the seven per cent tax and simply passed it along to consumers, who then often paid PST again on top of that. The panel calls it the 'invisible PST.' With the HST, most businesses receive a credit on sales tax, which means they no longer pass it along to the consumer. This is a very important benefit."

According to Hurst, the panel did a wide-ranging assessment of the costs that the HST has added to a typical family.  And it is clear that the lowest earners receive rebate cheques to offset the cost of the HST while the highest earners pay the larger share of the tax.

While the report speaks to the price tag for government of returning to the dual PST and GST regime, it is silent on the compliance costs to businesses of switching back. If a return to the old PST happens, businesses and their accountants would have to invest in new accounting and software systems and pay for training to deal with a return to the more complicated GST and PST.  "A return to the old system will add greater complexity resulting in expenses that will be passed along to consumers," says Hurst.

It also has wider implications for our overall economic success. "Apart from having to repay $1.6 billion to the federal government, it means that British Columbians will lose some very real economic benefits that will hurt our competitiveness. We will also reduce our credibility in the eyes of the investment community by reversing direction and re-adopting an outdated tax," said Hurst.

The Association also believes that if and when the HST proceeds that the government should provide a report that provides a summary of HST revenues compared to the old PST. This would demonstrate the economic benefits of the tax and provide transparency, Hurst said.

The panel was made up of four prominent individuals: a former Alberta Treasurer; a former Auditor General of B.C.; the CEO of Coast Capital Savings; and a Professor of Public Policy at Simon Fraser University. "We believe that the panel has made an important contribution to the public debate on the HST and CGA-BC encourages all citizens to take the time to read their report and vote for the tax in the upcoming referendum," Hurst said.

As the province's largest professional accounting association, CGA-BC represents nearly 15,000 CGAs and students. Members work in industry, commerce, government and in public practice. The Association promotes the excellence of its members and advances the accounting profession through education, certification and the protection of the public interest.

SOURCE Certified General Accountants Association of British Columbia

For further information:

Edward Downing, Director of Communications
Telephone: (604) 730-6208 or (778) 838-6334
E-mail: edowning@cga-bc.org
www.cga-bc.org

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