Tough sales tax choices remain

Switching sales taxes isn't as simple as Bill Vander Zalm believes. There are already thousands of businesses that have never had to collect it, and thousands more who didn't anticipate having to go back to the PST.

Finance Minister Kevin Falcon announces an 18-month transition period to switch B.C. businesses back to the old sales tax. It may be possible to do it sooner

VICTORIA – Bill Vander Zalm’s most fantastic claim after the defeat of the harmonized sales tax was that B.C. could go back to the old provincial sales tax in six weeks if the government wanted to.

Remember, this is the guy who once figured he could run an election campaign out of his car. He also promised to cut the price of beer, and then once elected, brought in a property purchase tax instead, without consultation. But I digress.

Vander Zalm’s typically simplistic analysis soon gave rise to another conspiracy theory. That’s the one that holds that the B.C. Liberals are dragging their feet on reinstating the old provincial sales tax so they can rake in added revenue for another 18 months. That would help repay the federal government $1.6 billion for the transition fund that helped B.C. institute the HST.

The finance ministry provided some details to get a better sense of the task ahead. First, there are 70,000 businesses in B.C. that switched their accounting and point-of-sale systems to the HST. It’s not likely that they kept notes, hardware and software on hand in anticipation of having to switch back.

Then there are the roughly 1,000 businesses that start up each month in B.C. Assuming most of that continues, by the time the federal and provincial governments undo the HST in March 2013, there will be thousands of businesses that have no experience dealing with the PST. They’re in for an unpleasant surprise.

Here’s one example. Smart Tax Alliance co-chair Mike Jagger got involved in the effort to defend the HST because of his experience running a security company in Vancouver. Due to the ambiguous nature of the PST rules, he got expert advice on how to pay the tax. Three different experts gave him three different answers.

You have probably heard by now that after the rejection of the HST by 55 per cent of voters, the PST is to be reinstated as it was before July 2010.

Finance Minister Kevin Falcon vowed, “I can assure British Columbians PST will not be applied to such items as restaurant meals, bikes and gym memberships – just as it was before the HST was introduced in B.C.”

That sounds pretty definitive. But I’ve learned in the last two years that there is seldom a simple answer with sales taxes.

For instance, should B.C. reduce tobacco taxes by seven per cent? Unless you’re a smoker, you probably didn’t notice that the HST raised the price of cigarettes by that amount. Tobacco was PST exempt, with the province historically having chosen to impose a separate “sin tax” instead.

Liquor taxes also went down under HST, from a 10-per-cent provincial tax to seven per cent. The B.C. government increased the Liquor Distribution Branch markup to hold onto the revenue, billing it as a policy move so as not to encourage drinking.

The hotel room tax also went down by a point under HST. Should that be raised? These are policy decisions that still must be made, with the province still in deficit.

• A correction to last week’s column: I referred to a PST reduction for Toyota Prius hybrids, suggesting it would be restored.

In fact this tax break had a sunset clause, and would have expired in March 2011 in any case. B.C.’s 2008 “green budget” brought in a series of PST incentives for fuel-efficient vehicles, from $1,000 to $2,000 depending on how carbon-efficient they were. PST exemptions were also extended to Energy Star appliances.

The centerpiece of that budget was the carbon tax.

Tom Fletcher is legislative reporter and columnist for Black Press and BCLocalnews.com

Follow me on twitter.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

‘How not to handle social isolation concerns’: Victoria police respond to confrontation with firearm

Police seize replica firearms after one resident confronts another over social distancing

Saanich swimmer Lauren Crisp in running for rookie-of-the-year

Saanich swimmer Lauren Crisp, Oak Bay’s Diego Maffia in running for rookie-of-the-year

Victoria company compares drone footage of city streets between August and now

Fewer cars, people seen on streets and at landmarks

Fairfield gas station fire deemed arson

Police looking for witnesses, video of 2:30 a.m. April 5 fire

As 240K apply for emergency benefit, Trudeau says aid coming for Canadians left behind

Canada Emergency Response Benefit provides $2,000 per month

Wearing non-medical masks can stop spread of COVID-19 before symptoms start: Tam

Health officials had previously not recommended wearing them

COVID-19 world update: 1,000 cases hit U.S. military; Good news in Spain, Portugal

Comprehensive collection of coronavirus news from around the world

Vancouver Island teen singer advances to American Idol top 20

Lauren Spencer-Smith performs Respect at outdoor concert in Hawaii

Businesses advised to prepare for federal, B.C. COVID-19 assistance

Canada Revenue Agency portal expected to open this week

Bars, cannabis sector eligible for $40B credit program from government bank

Applicants must go through their own banks to access the program

Emergency aid portal opens Monday, cash could be in bank accounts by end of week: Trudeau

Emergency benefit will provide $2,000 a month for those who have lost their income due to COVID-19

Education, not enforcement: B.C. bylaw officers keeping a watch on physical distancing

A kind word, it turns out, has usually been all people need to hear

Most Read