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You can love it or hate it but the HST is good public policy

Leading economists from across the country say the Harmonized Sales Tax is the single most important step British Columbia can take to boost its economy.

Studies have shown that it's already working in the eastern provinces.

article from the vancouver sun:

Quote:

You can love it or hate it but the HST is good public policy
Vancouver SunSeptember 1, 2009

Personal income tax is the single largest source of provincial government revenue.

Individual taxpayers contributed $6.2 billion in the last budget, representing about one-third of total taxation revenue, giving Victoria the financial wherewithal to spend $15 billion on health and $10 billion on education.

Statistics Canada says the top 10 per cent of income earners pay 52 per cent of all taxes.

Half the population in B.C. pays no income tax at all.

It is obvious from these facts that taxes paid by high-income individuals are crucial to the standard of living of British Columbians.

It should also be clear, even though it has been missing from the debate, that the harmonized sales tax is intended to ensure that B.C. is able to maintain and create employment that pays people well.

The average annual wage in B.C.'s mining industry is $112,000, an income that attracts the highest marginal provincial tax rate (and second-highest federal rate).

Highly paid work is equally found in forestry, manufacturing and oil and gas.

It's no accident that these industries are singled out to benefit from the introduction of the HST.

Collectively, they will save approximately $1.9 billion with the removal of provincial sales tax from business inputs.

The PST is an embedded cost to producers and that makes them uncompetitive not only in export markets but here at home, where they battle for market share against foreign rivals who have not been burdened by similar taxes.

In other words, by retaining the antiquated provincial sales tax, we disadvantage local companies at home and abroad.

Moreover, the evidence from the Atlantic provinces, where the harmonized tax was introduced in 1997, suggests the tax shift raises capital investment, which in turn boosts productivity.

B.C. lags the rest of Canada in this important measure of the efficiency of production.

Many analysts agree that future economic momentum will come increasingly from productivity gains rather than employment growth. The B.C. government claims the HST is equivalent to a 40-per-cent tax cut on business investment, which should propel productivity improvement going forward.

Baldly stated, more competitive businesses create high-paying jobs and generate tax revenues needed for essential services like health care and education.

There is plenty to criticize in the manner and method Gordon Campbell's Liberal government chose to introduce such a dramatic change in direction; that is, by decree issued unexpectedly in the first year of a new term with the legislature in recess.

Regardless of any political missteps, however, the HST is sound public policy.

It is pointless to try to conceal the fact that some goods and services that were exempt from provincial sales tax will now be subject to the harmonized tax, making them more expensive for consumers.

But economics is all about trade-offs. Without the $1.6-billion transition payment from the federal government, the reduction in administrative costs for government and business and the incentive to maintain highly-paid employment, it is more than likely personal income taxes would have to go up.

Perhaps an income tax cut might have made the HST a little more palatable at the outset, allowing it to be characterized as revenue neutral, like the carbon tax.

In any case, the burden on consumers may not be as significant as it's made out to be.

For example, homebuilders are particularly concerned about HST because they estimate it will increase the cost of a $600,000 home by $42,000, or $22,000 after the maximum $20,000-rebate the government has proposed.

However, the cost of construction should be substantially lower because the HST on building materials will be eliminated by an input credit.

Presumably, some builders will pass on these savings.

Resale homes are unaffected by the HST, although fees for legal and related services would attract the tax.

Given the high cost of housing and the added "closing costs" associated with a real estate sales, Victoria could soften the blow by increasing the threshold at which the HST kicks in and/or reducing the Property Transfer Tax.

The restaurant industry is also upset that the HST will apply to restaurant meals, which have been exempt from PST, a tax that restaurants in most other jurisdictions have paid for many years.

Unfortunately, there is no public policy goal to be realized by continuing to exempt this industry.

Money not spent on restaurant meals will be diverted to other uses. There's no negative macro-economic hit if the restaurant industry contracts, as one analyst bluntly put it.

Here again, the government could ease the pain by reducing payroll taxes like Workers Compensation premiums and urging the federal government to reduce Employment Insurance premiums.

B.C. needs coffee shops, restaurants and condo developments.

But we also need to produce goods and services such as base metals, lumber and high-tech gadgets the rest of the world wants to buy at competitive prices.

The best thing the government can do to induce that outcome is to tax consumption rather than production and investment.

And that's what the HST does.

© Copyright (c) The Vancouver Sun

This article couldn't be more wrong.

The single most important thing that would boost the economy is legalizing and taxing the sale of Marijuana.

The HST is going to cripple the restaurant industry.
Places where they automatically slap on an 18% service fee, will now add the 12% HST. You're going to be paying 30% tax for your restaurant food.

Good luck with that.

HST, GST, PST

who give a shit anymore, its not like we can change the law

peace out !

Bullshit, high-income individuals pay little to no tax. Why else would you hear about all those rich folk getting in shit for not paying their taxes?

Things to do

1) Buy a car before Jul 1 next year.
2) Make reservations for no more than 7 ppl in restaurants. If more, reserve 2 tables.

What the article is saying, and the government is hoping, is that businesses and restaurants will have lower operating costs due to harmonizing of the two taxes. They are hoping that these savings will be passed onto the consumers. So even though you are paying an extra 6% for your food, the food should cost less.

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Originally Posted by ynot-llat (Post 6573086)

This article couldn't be more wrong.

The HST is going to cripple the restaurant industry.
Places where they automatically slap on an 18% service fee, will now add the 12% HST. You're going to be paying 30% tax for your restaurant food.

I hope you are being sarcastic.

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Originally Posted by mickz (Post 6573434)

Bullshit, high-income individuals pay little to no tax. Why else would you hear about all those rich folk getting in shit for not paying their taxes?

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Originally Posted by bananana (Post 6573696)

restaurant won't reduce prices, if anything the prices will stay the same and increase. Find me a restaurant in town that has "reduced" all prices across the board instead of having "specials".

as for the Rich, it depends. how they are setup. self employed, salaried, company.

the rich CAN pay little or no taxes. i've seen T1 for 10k when he makes 2.5million annually.

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Originally Posted by bananana (Post 6573696)

a restaurant doesnt have to pay much GST or PST on the stuff they buy because its mostly raw food which dont require either.

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Originally Posted by mickz (Post 6573434)

Bullshit, high-income individuals pay little to no tax. Why else would you hear about all those rich folk getting in shit for not paying their taxes?

Get a clue

Looking forward to the decrease in tax on alcohol

General rule of thumb to live by: if a politician tells you something is good for you, it's not.

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Originally Posted by ynot-llat (Post 6573086)

The HST is going to cripple the restaurant industry.

No it won't.

BC has the highest restaurant menu prices of all provinces and people here still eat out a ton. I pay on average 20-30% more for meals here than Ontario.

Example: I typically get a "hungry man breakfast" which costs about $12 in most places I've eaten in Vancouver, plus coffee is extra ($3). The same breakfast was $10 with coffee included in Ottawa.

Do I refuse to go out cause I'm paying 50% more for breakfast? No. Eating out is a luxury and people will continue to pay even if prices go up 12%.

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Originally Posted by bananana (Post 6573696)

Business won't pass on these costs, and I doubt that is the hope of the government.

This change puts more money into business's hands, which should allow them to hire more and expand their business since they won't pass this along to the consumer.

the HST is one thing, but its the approach the liberals specifically their leader gordon campbell took to impliment the HST.

it was sneaky, it was sly, it was typical gordon campbell liberal politics.

if there was discussion, explanation of the HST to the public before applying it or the suggestion of applying it, then it would have been easier to accept. but not this "drop the bomb" tactic.

Shit, the NDP are having a field day on this one... I dont like NDP either, i like the liberals just not their leader.

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Originally Posted by !SG (Post 6574406)

How would you "explain it to the public" without "dropping the bomb"?

What you really mean is "explain it to the public" and "let the public have an opportunity to say NO" and reject it. There is no opportunity to reject this, its a federal mandate, and either BC can take the cash bribe and run or wait till Ottawa mandates the change and get nothing.

Its not going into affect for a year, so its hardly "dropping the bomb". Peple just don't like change or taxes and want to bitch/whine/complain.

saw the new last night, they're going to raise msp as well because of the "huge" deficit that they "couldn't" forsee.

"dropping the bomb" also means you dont have a choice, here you go!

campbell also campaigned, mind you it was in spring, not last year, not the year before, but months ago, no changes to tax. the way gov't works, decisions on something such as HST arent made within days. Also opposition party, let alone the rest of the house didnt even know of the HST.

I wont even begin to mention the budget being so far off. come on, if u build a house, and you do go over budget, its lets say, worse case scenario, 50% over budget, its within reason. but the gov'ts "estimation" was so far off, 5 times if not more than what was estimated. sure our economy took a dump this year, but come on, grade 10 business ed taught us how to better balance our books than how the current gov't is doing with them.

yes jumping on the fed cash rebate is always good, but decisions like these, and the way they have been handled, is down right stupid.

you'd think campbell's media relations, and liberal party would have put up a red flag saying "the public isnt gonna handle this good, maybe we should at least act humble about it and play it off." but instead its do it first, ask for permission 2nd. they are hired and elected, not the other way around. technically speaking the gov't is the employee, and the public is the employer, thats why they are called public civil servants.

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Originally Posted by taylor192 (Post 6574459)

it is like the carbon tax and it screws over the average joe We will even be taxed on things that were not taxable before like bike safety gear, like helmets for cyclists and motorcyclists for example.

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Originally Posted by Nightwalker (Post 6574300)

Looking forward to the decrease in tax on alcohol

It was talked about on the news last night. Though the HST will bring down the tax on alcohol, the BC government is adding another tax to alcohol so in the end, the price isn't going to come down. :mad:

i'm not in favour of the sales tax because i'm the consumer.. and when it comes down to it i have no control over what price i pay. i just know i have to pay it.

if the HST actually works then the consumer "should" see the benefits.. i just find it hard to believe that companies who are making more money by saving on PST will actually pass those savings down to us? isn't it all about their bottom line.. so if they're making more why would they lower their prices?

BUT, in theory i do agree with the HST... i'm just weary about the practical application..

and only if our bitching and whining is going to do anything... what's done is done.. and HST is coming july 2010 ftw or failblog... we'll see.

Economies will always go up and down. I wonder what the next tax will be when the next recession hits

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Originally Posted by Illuminate (Post 6574706)

Economies will always go up and down. I wonder what the next tax will be when the next recession hits

Next one is increase in MSP....

Oh wait.. its coming.. Jan 2010

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