Sales taxes in British Columbia come in the form of the Goods and Services Tax (GST) and Provincial Sales Tax (PST).
Consumption taxes have been levied in British Columbia since the introduction of the Provincial Sales Tax (PST) on 1 July 1948, as part of the Social Service Tax Act. Sales in the province have also been subject to the federal Goods and Services Tax (GST) since its introduction on 1 January 1991.
On 1 July 2010, the PST and GST were combined into the HST levied according to the provisions of the GST. The conversion to HST was controversial; popular opposition led to a referendum on the tax system, the first such referendum in the Commonwealth of Nations, resulting in the province reverting to the former PST/GST model on 1 April 2013.
The sales taxes levied in the province are the separate 7% PST and 5% GST, as of April 2013.
The former British Columbia Provincial Sales Tax (BC PST) was introduced on 1 July 1948 as part of the Social Service Tax Act. [1] It was initially set at 3%, [2] but later rose to 7%. The PST was collected on most goods and some services. The main difference between the national Goods and Services Tax (GST) and the BC PST was its taxable base, since the GST taxation was levied regardless of whether the good or service was for "final use" or not.
Tax exemptions included: unprocessed food, restaurants, motor fuel, children's clothes and footwear, goods purchased for resale or export, goods used in the manufacturing or production of an end use product, legal services, massage therapy, vitamins, repair services, and taxis.
When a good or service is not subject to PST, a specific exemption in the legislation is not needed. Similar to the old PST, the following are not taxable under the new PST: the sales of real property such as residential housing or commercial real estate; admissions, registrations, and memberships; professional services (other than legal services); and transportation fares (e.g. bus, train, ferry, airline).
The PST revenue was estimated at $5.087 billion for the 2009/2010 fiscal year, [3] from which about $2 billion was paid directly by the business sector. PST revenue accounted for about 13% of the province's total revenues which were budgeted at $38.812 billion.
The Harmonized Sales Tax (HST) was a value-added tax that combined a 5% federal portion and a 7% provincial portion into one tax paid on almost all purchases of goods and services. The HST came into effect amidst contention among British Columbians on 1 July 2010. The BC Liberal government announced on 23 July 2009 that it intended to replace the PST by an HST, combining the GST with a provincial tax following the same rules as the GST. [4] Had the HST passed the referendum, the BC Liberals contended that they would have reduced it to 10% in 2014.
The governing Liberals contended that, although PST was a retail tax, the business sector was also subject to a 7% PST on most of its input; business in BC was put at a competitive disadvantage with business in other jurisdictions not subject to similar taxation.
The Liberals argued that transferring this tax to the consumer favoured both exportation and investment in productivity. A federal Conservative government study considered this a more efficient method of taxation; [5] labour-intensive service industries (like hairdresser or hospitality services), where inputs are marginal, would be disfavoured.
The HST added an additional 7% of sales tax to the following items: [6]
The HST lowered the sales tax on the following items: [6] [7]
Some people believed that the HST would generate significantly more revenue, because while the PST revenue was estimated at $5.083 billion for 2009/2010, several sources concurred and estimated a 5% GST revenue for British Columbia of about $5 billion (or a tax base at about $100 billion after the current GST exemption concerning the public sector). [9] [10] It suggested that since most sales subject to GST would be HST taxable (at 7% for the BC HST revenue), this revenue could be multiplied by 7%/5% to estimate the gross BC HST revenue. If the taxable base were roughly the same, this would result in approximately $7 billion in BC HST revenue.
It did not take into account the additional transition payment of $1.6 billion provided by the federal government as a consequence of the HST adoption, and collection cost saving estimated at $30 million. [11]
According to BC government's projection, [12] gross BC HST revenue for 2011/12 would have been $6.92 billion. After various rebates, the net BC HST revenue would have been $5.38 billion, which is $410 million more than the would-be BC PST revenue ($4.97 billion) if there were no reform. The BC government argued that the $410 million difference, however, would be returned to residents through HST-related personal income tax reductions in the forms of BC HST credit and increased basic personal amount. The overall fiscal impact of harmonization on BC households was therefore supposedly neutral.
In order to be revenue-neutral, the BC government had several options. The Memorandum agreed between the provincial and the federal government gave the former the flexibility to
The Memorandum seemed to prefer the second path by suggesting exemption of motive fuel, children's clothing and footwear, children's car seats, feminine hygiene and books.
Following the rationale justifying the introduction of the HST, the BC government followed the example of the Ontario government, and chose to reduce other taxes including some claimed by the Fraser Institute to be inefficient in economic terms such as personal income taxes. [5] [13] [ needs update ]
Rather than decrease the rate of the HST across the board, the provincial government chose to favour some special interest group industries, which received some criticism; some noted that the discretionary exemptions defeated one purpose of the HST: tax harmonization, with cost-saving achieved by red-tape reduction.
The HST shift appeared to benefit mostly the capital-intensive multinational industries such as mining and forestry in BC. The government chose to exclude most of the labour-intensive service industry from HST tax relief, and appeared to favour the rural BC interior over the urban area ridings. The exemption on automotive fuel was one consequence of this choice; the tax shift would favour declining legacy industry, representing a declining share of the BC GDP. [14]
However, the government adopted the following policy on goods taxation:
In 2008, BC introduced a carbon tax as part of its effort to reduce greenhouse gas emissions, which is applied to motor fuels as well as other fuels . Implementation of the carbon tax was controversial as the 2010 BC Budget granted petroleum fuels a 5% reduction from the carbon tax while imposing the full carbon tax on renewable fuels. [15] While motor fuels are also subject to HST, the province decided that once the HST was implemented it would rebate the 7% provincial portion of the HST on motor fuels at the time of purchase.
The BC government chose not to reduce the carbon tax and/or other taxes on motor fuels such as transportation infrastructure and transit taxes and then add the HST. This decision meant that businesses which purchase motor fuel to operate their businesses were unable to deduct any of the provincial taxes they pay on motor fuels from the HST they collect on their sales. This outcome is particularly harsh on businesses that had not been required to collect the PST but must use motor fuels to operate their businesses, such as sightseeing and adventure tour businesses.
In BC, the HST was reported to be a tax shift onto consumers and away from business. The BC government estimated businesses would pay $1.9 billion less in sales taxes. [11] claiming that this would boost investment from corporations as their MTR[ clarification needed ] is reduced. The claim is made that this would benefit consumers through more jobs and lower prices.
A report done for the BC Ministry of Finance by University of Calgary economics professor Jack Mintz predicted that moving to the HST would create 11,300 jobs per year, increasing employment income by around $333 million, and result in capital investment of $1.15 billion/year.
In 2009/2010, the government spent $70 million in the promotion of healthy living and sports. Introducing the HST added a new taxation of 7% for numerous health-friendly activities, such as purchasing bicycles, fitness and gym club memberships, and ski passes.
The HST increased the price of heating fuel, which was previously exempted by the PST. The government claimed it planned to provide a tax credit to mitigate this effect.
Renting a home was exempt under HST.
The purchase of an existing home was exempt from the HST, while the purchase of a new home was subject to a GST rebate of 36% if the purchase price was below $350,000, up to a maximum rebate of $8,750 (which made the tax rate effectively 3.2%). Under the PST, the purchase of a new home was tax exempt. Under the BC HST, up to $200,000 of the provincial part of the HST could be refunded (making the purchase of new home under $400,000 virtually tax free).
Nevertheless, the service of real estate agents and home appraisals became subject to full HST, whereas before they were only subject to GST. The BC Liberal government argued the change would have little effect on the market:
The government argued that HST effect on new home pricing would be mitigated by suppression of the PST on the construction inputs[ citation needed ].
On 26 August 2011 Elections BC, the independent electoral overseer, announced that British Columbia voters defeated the new tax in the binding referendum conducted in June and July 2011 via a mail-in ballot. It was the first binding referendum on taxation in any state/provincial or national jurisdiction in the Commonwealth of Nations. The referendum results were as follows:
Elections BC compiled the vote totals by electoral district; the HST was voted down in 60 of British Columbia's 85 districts. The HST was rejected by local majorities in 27 of the 49 districts held by the governing Liberals, and in 33 of the 36 seats held by the opposition NDP. The HST was approved by local majorities in 22 of the Liberal-held districts, and in three NDP-held districts.
There was considerable local variation in the vote results. The anti-HST vote was highest in Surrey-Green Timbers, where 75.51% voted Yes and 24.49% voted No. The anti-HST vote was lowest in West Vancouver-Sea to Sky, where 39.22% voted Yes and 60.78% voted No.
As of April 2013, the 5% federal GST and 7% provincial PST are collected separately again.
William Nicholas Vander Zalm is a Dutch-born Canadian businessman and politician. He served as the 28th premier of British Columbia from 1986 to 1991.
A sales tax is a tax paid to a governing body for the sales of certain goods and services. Usually laws allow the seller to collect funds for the tax from the consumer at the point of purchase.
The goods and services tax is a value added tax introduced in Canada on January 1, 1991, by the government of Prime Minister Brian Mulroney. The GST, which is administered by Canada Revenue Agency (CRA), replaced a previous hidden 13.5% manufacturers' sales tax (MST).
In Canada, there are two types of sales taxes levied. These are :
The harmonized sales tax (HST) is a consumption tax in Canada. It is used in provinces where both the federal goods and services tax (GST) and the regional provincial sales tax (PST) have been combined into a single value-added tax.
The Canada Revenue Agency is the revenue service of the Canadian federal government, and most provincial and territorial governments. The CRA collects taxes, administers tax law and policy, and delivers benefit programs and tax credits. Legislation administered by the CRA includes the Income Tax Act, parts of the Excise Tax Act, and parts of laws relating to the Canada Pension Plan, employment insurance (EI), tariffs and duties. The agency also oversees the registration of charities in Canada, and enforces much of the country's tax laws.
Goods and Services Tax (GST) in Australia is a value added tax of 10% on most goods and services sales, with some exemptions and concessions. GST is levied on most transactions in the production process, but is in many cases refunded to all parties in the chain of production other than the final consumer.
An ad valorem tax is a tax whose amount is based on the value of a transaction or of a property. It is typically imposed at the time of a transaction, as in the case of a sales tax or value-added tax (VAT). An ad valorem tax may also be imposed annually, as in the case of a real or personal property tax, or in connection with another significant event. In some countries, a stamp duty is imposed as an ad valorem tax.
Goods and Services Tax (GST) is a value-added tax or consumption tax for goods and services consumed in New Zealand.
Taxes in New Zealand are collected at a national level by the Inland Revenue Department (IRD) on behalf of the New Zealand Government. National taxes are levied on personal and business income, and on the supply of goods and services. Capital gains tax applies in limited situations, such as the sale of some rental properties within 10 years of purchase. Some "gains" such as profits on the sale of patent rights are deemed to be income – income tax does apply to property transactions in certain circumstances, particularly speculation. There are currently no land taxes, but local property taxes (rates) are managed and collected by local authorities. Some goods and services carry a specific tax, referred to as an excise or a duty, such as alcohol excise or gaming duty. These are collected by a range of government agencies such as the New Zealand Customs Service. There is no social security (payroll) tax.
Income taxes are the most significant form of taxation in Australia, and collected by the federal government through the Australian Taxation Office (ATO). Australian GST revenue is collected by the Federal government, and then paid to the states under a distribution formula determined by the Commonwealth Grants Commission.
The Canadian federal budget for the fiscal year 2006–2007, was presented to the House of Commons of Canada by Finance Minister Jim Flaherty on May 2, 2006. Among the most notable elements of the federal budget were its reduction of the Goods and Services Tax by one percentage point, income tax cuts for middle-income earners, and $1,200-per-child childcare payment for Canadian parents.
Goods and Services Tax (GST) in Singapore is a value added tax (VAT) of 9% levied on import of goods, as well as most supplies of goods and services. Exemptions are given for the sales and leases of residential properties, importation and local supply of investment precious metals and most financial services. Export of goods and international services are zero-rated. GST is also absorbed by the government for public healthcare services, such as at public hospitals and polyclinics.
The 1998 Nova Scotia general election was held on March 24, 1998 to elect members of the 57th House of Assembly of the Province of Nova Scotia, Canada. The Liberal party and the New Democratic Party tied in the seat count, with 19 each, while the Progressive Conservatives won 14 seats. The Liberals went on to form a minority government with the support of the Progressive Conservatives.
The main fuel tax in Australia is an excise tax, to which Goods and Services Tax ("GST") is added. Both taxes are levied by the federal government. In Australia the GST is applied on top of the fuel excise tax. In some cases, businesses may be entitled to exemptions or rebates for fuel excise tax, including tax credits and certain excise-free fuel sources.
In Canada, motor vehicles are primarily powered by gasoline or diesel fuel. Other energy sources include ethanol, biodiesel, propane, compressed natural gas (CNG), electric batteries charged from an external source, and hydrogen. Canada, like most countries, has excise taxes and other taxes on gasoline, diesel, and other liquid and gas motor fuels, and also taxes electricity at various administrative levels. Most provinces and territories in Canada also have taxes on these motor fuels, and some metropolitan areas such as Montreal, Greater Vancouver, and Victoria impose additional taxes.
The 39th Parliament of British Columbia sat from 2009 to 2013, replacing the 38th parliament and being succeeded by the 40th parliament. It was composed of two elements: the Legislative Assembly of British Columbia, as elected by the general election of May 12, 2009, and The Queen represented by the Lieutenant-Governor. That election resulted in a majority government for the BC Liberal Party led by Gordon Campbell, and a BC New Democratic Party official opposition.
A referendum on sales tax was held by postal ballot in British Columbia from June 13 to August 5, 2011, though Canada Post workers were locked out until June 27. Voters were asked whether the Harmonized Sales Tax (HST) should be retained or split back to the original Provincial Sales Tax (PST) and Goods & Services Tax (GST). If the majority of voters voted "Yes" to extinguish the HST, 7% PST would be reinstated and the combined tax rate would remain at 12%. If the majority of voters voted "No", the BC government would reduce the HST rate to 11% in 2012 and 10% in 2014.
A value-added tax (VAT or goods and services tax (GST), general consumption tax (GCT)), is a consumption tax that is levied on the value added at each stage of a product's production and distribution. VAT is similar to, and is often compared with, a sales tax. VAT is an indirect tax because the consumer who ultimately bears the burden of the tax is not the entity that pays it. Specific goods and services are typically exempted in various jurisdictions.
Sales tax in Alberta consists only of a federal consumption tax, the Goods and Services Tax (GST).
{{cite web}}
: CS1 maint: archived copy as title (link){{cite web}}
: CS1 maint: archived copy as title (link) Public Accounts of Canada states the 5% GST revenue for all of Canada was $29.9 billion for 2007/2008, and considering the contributive part of British Columbia was 15.4% in 2003 according to http://www.parl.gc.ca/information/library/PRBpubs/prb0610-e.htm, 29.9*(15.4%)= $4.6Billions not including the BC GDP growth{{cite web}}
: CS1 maint: archived copy as title (link)