HST will be introduced in BC from July 2010, announced by Finance
Minister Colin Hansen on July 24, 2009. HST was always on the
horizon and after winning the election in May, Premier Gordon
Campbell took his approval by the BC voters to bring in HST.
Here is what HST will do to BC, does not matter who says what!!!
HST will increase the price of everything (except
for certain items) for the end user, by 7%. So, attention BC
consumers, get ready to pay 7% more for all usual items from July,
2010.
Current PST/GST exempt goods will still be HST
exempt.
Current GST (5%) taxed goods will be charged HST (12%).
HST will save business production cost, since
they will be able to claim HST (12%) input tax credit. Currently
they can only claim GST (5%). Assumption is since businesses will be
able to get a 12% refund, their production cost will go down and
they will pass the savings to consumers. This assumption is totally
wrong. Many of the items that businesses use are already PST exempt,
with HST these supplies will cost 7% more and the net effect will be
zero impact for production cost. So, consumers will pay the
higher price with additional tax (HST).
Effect of this HST will be lost consumer
purchasing power. Same amount of money will buy you less item. If
you buy less, the businesses will lose revenue and the cascading
effect will be lost of economic activity.
As a consumer, what can we do?
Consumer cannot claim HST input tax credit. To
claim HST credit, consumer has to register him/her self as a
business and will be able to offset some of the HST paid by input
tax credit for the items used in business.
Consumer can plan purchases, which are HST
exempt. Many items which are bought new are fully HST taxable. Some
of these items, if you are buying used are HST tax exempt. New
home purchase are HST taxable, where as existing homes are HST tax
exempt.
Cost of a $100
Restaurant Meal
This is a simple example of how consumers are
loosing purchasing power with tax laws.
To purchase a restaurant meal costing $100
subject to HST (12%), you will need $112.
To have $112 in disposable income after taxes,
(employment income tax rate is about 22%), you will need a gross
income of $136.64.
Next time you go to Restaurant and your tab is
$100, here is how much money you will need to make to pay for that
meal.
| Meal |
$100 |
| HST (12)% |
12 |
| Tips (15%) |
15 |
| Restaurant bill |
$127 |
| Income tax (Source Tax 22%) |
28 |
| Total income to Earn for the Meal |
$155 |
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