It's early days but there's no question that today's suprise announcement by Premier Gordon Campbell and Finance Minister Colin Hansen that BC will "harmonize" its PST and the GST into a blended 12% tax will cost you a lot of money.
That's because the new "HST" of 12% will apply to a lot of goods and services that previously were only subject to one of the two taxes.
Here's a short list of affected goods and services that are currently exempt from the 7% PST but will be subject to the full 12% HST when it is implemented in July 2010.
Businesses are able to recover the PST portion of the tax they currently pay - meaning in theory that the price could come down 7%.
• Food portion of restaurant meals
* Residential fuels (electricity, natural gas) and heating.
• Basic cable TV and residential phones.
• All food products (only basic groceries will remain exempt under new tax).
• Non-prescription medication.
• Vitamins and dietary supplements.
• School supplies (books will continue to be exempt).
• Magazines and newspapers.
• Work-related safety equipment.
• Safety helmets, life jackets, first-aid kits.
• Smoke detectors and fire extinguishers.
• Energy conservation equipment (e.g., insulation, solar power equipment).
• Personal services such as hair care.
• Dry cleaning.
• Repair services for household appliances.
• Household maintenance such as renovations and painting.
• Real estate fees.
• Membership fees for health clubs.
• Movie and theatre tickets.
• Funeral services.
• Professional services such as accounting and home care.
• Airline fares within Canada.
So why has the government suddenly introduced this new HST?
One big reason is that the federal government will give BC $1.6 billion to implement the change to the HST.
But the other big reason was given in the BC government's own news release - here is the list of groups supporting the "harmonization" of the GST and PST - see if you can guess what they all have in common:
SOME ORGANISATIONS THAT HAVE CALLED FOR HARMONIZATION
B.C. Business Council
B.C. Progress Board
B.C. Chamber of Commerce
Canada West Foundation
Conference Board of Canada
Chartered Accountants of British Columbia
Retail Council of Canada
Canadian Manufacturers and Exporters
Certified General Accountants – British Columbia
Certified General Accountants – Canada
Gee - no labour groups, no consumer organizations, no community groups - just business oriented organizations!
More on this in the days ahead.