TORONTO, June 29, 2011 /CNW/ - British Columbia is on the right track
with its controversial move to a harmonized sales tax (HST), according
to a C.D. Howe Institute report released today. In "The Time is Still
Right for BC's HST," authors Finn Poschmann and Alexandre Laurin say
the shift to a value-added taxes mirrors patterns in most of the
developed world, and helped move the province from being a high tax,
investment-unfriendly jurisdiction, to one which is domestically and
internationally competitive - a more attractive home for investment and
The authors assess the impact so far of BC's move to an HST, effective
summer 2010. Instead of paying a 7 percent retail sales tax - which was
eliminated - and a 5 percent federal Goods and Services Tax (GST), BC
residents pay a single, harmonized tax of 12 percent, with 7 percent as
the provincial portion. The provincial government since has announced
its intention to drop the provincial portion to 6 percent in 2012 and
to 5 percent by 2014, which would bring the HST rate to 10 percent.
This HST, now the subject of a referendum, has been beneficial overall,
say the authors. They report:
Replacing British Columbia's retail sales tax with the HST improved the
province's investment climate. Estimates of the impact anticipate more
than 100,000 additional jobs over the coming decade.
The change made the taxes that were previously embedded in business
costs, and therefore invisible to consumers, explicit at the cash
register. But the total price to consumers hardly budged because the
lower business costs flowed through to consumers.
Consumption taxes like the HST in BC impose smaller burdens on the
economy, per dollar of government revenue, than alternatives such as
old-style retail sales taxes or taxes on personal and business incomes.
For these reasons, conclude the authors, BC residents are well served by
the new HST.
For the study go to: http://cdhowe.org/pdf/ebrief_119.pdf
SOURCE C.D. Howe Institute
For further information:
Finn Poschmann, Vice President Research;
Alexandre Laurin, Associate Director of Research,
C. D. Howe Institute,