Submitted by North Peace MLA Pat Pimm
My decision to support the implementation of HST is about what is best for Peace River North and BC. There is so much misinformation out there regarding the HST that I feel necessary to state some facts.
Lower-income British Columbians unquestionably come out ahead with the HST and the associated tax cuts and credits. Some facts to support this are:
* It will cost NOTHING more to fill your prescriptions due to HST.
* It will cost NOTHING more to put gasoline in your vehicle due to HST.
* A provincially-administered point-of-sale rebate for residential energy will also ensure the HST will not increase consumers’ costs for oil, electricity, natural gas or propane used to heat or power homes.
* It will cost NOTHING more to heat your homes due to HST.
* Any item that presently has GST and PST in the total cost will NOT change due to HST.
* In addition, like the GST the HST will not apply to basic groceries and residential rent, two items which account for a large proportion of total expenditures by those with lower incomes. Almost all other items that are currently zero-rated or exempt from the GST will also be zero-rated or exempt from the HST.
* Any goods or services that consumer does not pay GST on today, they won’t pay HST on either.
* There will be point-of-sale rebates – similar to PST exemptions for the provincial portion of the HST – on gasoline or diesel fuel for motor vehicles, residential electricity and home heating fuels, books, Children sized clothing, childrens car seats and booster seats, diapers and feminine hygiene products.
* HST Tax credits will be paid quarterly with the GST credit, to more than 1.1-million British Columbians – one quarter of the population.
* $230 tax credit for each individual that makes less than 20,000.00 per year.
* $230 tax credit per family member for families with incomes up to $25,000. This means $920 for a family of four.
* When combined with the recently introduced climate action credit, low-income British Columbians will now be eligible for up to $340 a year in provincial credits, in addition to the existing GST credit.
* Please keep in mind that for any person making less than $22,000.00 per year you have a 100% MSP subsidy – 80% subsidy for those from 22,001 to 24,000.00 – 60% subsidy for those from 24,001 to 26,000.00 – 40% for those from 26,001 to 28,000.00 and 20% for those from 28,001 to 30,000.00.
* Since Pharma care was introduced by this government low income families earning $14,000.00 or less per year, pay absolutely nothing for their prescription drugs. Any person born before 1939 and earns less than 33,000.00 per year pays no deductable for pharmacare. The deductible for a family with a net income of $30,000 was $1000 prior to Fair PharmaCare. Today that deductible is $600. The maximum that same family would pay in one year prior to Fair PharmaCare was $2000.00. Today that family only pays $900. For example, a single mother with one child earning $28,000 per year and $2,000 in annual drug costs pays 29% less under the Fair PharmaCare plan than she did in 2001.
* It is also very interesting to note that the income taxes paid by the average British Columbian were substantially higher in 2001 than they are today, even though everything else has gone up substantially. Every tax bracket was about 35% higher than Alberta in 2001 and now we are the lowest in Canada in 2010 for any individual making $118,000.00 and less.
I must address the inaccuracies of the VIRAL email currently circulating:
* The email states that an average senior couple earning $41,000.00 per year will pay an additional $2,100.00 after the introduction of HST. This statement is false. The couple would have to spend 30,000.00 per year on currently PST exempt items to incur this kind of cost. The email states that everyone will pay more for car insurance, home insurance, home heating, and gasoline. These items will all remain the same price as they are either exempt, rebated or currently subject to PST and GST. This couple would see virtually no increase due to HST. In fact, for the senior couple who earns $25,000 per year or less, they will be eligible for the rebates and would receive money due to HST.
Business and HST:
* A common complaint about the HST is that it ‘benefits big business’. – and that the average taxpayer will have to pick up all of the savings that big business will receive. The more important part of that statement is that the employees of that business are also true beneficiaries. When companies gain competitive advantages, they can grow and expand, hiring more people for the long-term.
* Currently, PST is applied at every step in the creation of a product. Those multiple PST charges are embedded in the price you pay at the store – even though you can’t see it. And of course, you pay PST on the final purchase price. Under the current PST system, embedded PST results in higher production costs, less investment, fewer jobs and lower wages. Under the proposed HST system, those embedded costs are removed for savings. The proposed HST will remove about $2 billion worth of embedded PST, and will result in more investment, jobs and higher wages. Costs of doing business will come down as the 5% GST rebate on business inputs increases to a 12% HST rebate. Currently, only GST-taxable items are refunded; under the HST, the full 12% (5% + 7%) comes back to the business through the input tax credit system.
* Due to our tax structure in 2001, small business was leaving British Columbia almost daily and setting up in Alberta. Today they are starting to move back due to the fact that we are now competitive with the Alberta rate and we will have zero small business tax rate by 2011.
* Large corporations were also leaving British Columbia and moving to the East in 2000. Today we are starting to see them come back as we now have one of the most competitive tax structures in the world. This is the right step to take for B.C.’s economy as it will encourage a competitive business climate here in B.C. and make our exports more competitive abroad.
* Not only will the provincial tax portion of HST become reclaimable for businesses, HST will lower the cost of goods and services. This will result in additional savings which increases the buying power of your dollar.
Savings, benefits and jobs:
* BC will save approximately $30 million in administrative costs because the federal government will administer the HST at no cost to the province. This will result in additional funds available for social programs such as health, education and social assistance. Adopting the HST saved New Brunswick 43 per cent, or more than $5 million, of its annual tax administration costs
* It will attract new investment as it increases productivity. And it will create jobs and encourage long-term economic growth. It is predicted that there will be 113,000 new jobs created in BC over the next decade because of the move to the HST.
* HST will save all of our industries millions of dollars. These savings will make the difference between some business’s staying open rather than shutting down. Every time one of these business’s decides to stay open, it means they will save and create jobs. Every time a new business opens because it can see the savings as a result of HST, it creates more jobs.
* An overall boost in the economy and employment provides an indirect benefit to industries such as homebuilders, realtors, restaurants. When people are employed and earning higher wages, they spend more money.
* The proposed Harmonized Sales Tax (HST) will reduce costs for B.C.’s small and medium sized businesses by eliminating the PST on business inputs. Currently, businesses pay PST on most of their “inputs” that go into producing or selling their products and services. For example, tax is paid on office equipment, supplies and furniture, telecommunications equipment and services, vehicles and energy to heat and light their buildings and power their equipment. Under the proposed HST, all B.C. businesses will no longer pay tax on these input costs resulting in savings.
* Think about a local welder, contract operator, or contract pipe fitter. Under the GST/PST system, he buys a new truck worth $100,000. He pays 5% GST & 7% PST. When he does his input tax credit, he can claim the 5% GST back as a credit, but the 7% PST is not refunded. He has to build that cost into his final product for sale as ‘overhead’ – it’s a cost of doing business. With the HST, he’ll now be able to claim the full 12% back, saving him an additional $7,000.00, leaving more money in his company to be invested in new equipment, employees, technology, etc. This will without question be the single most important thing to help level the playing field between British Columbia and Alberta.
More than 130 countries, including 29 of the 30 OECD countries have adopted similar taxes – B.C.’s move to implement an HST will bring us into line with what is viewed as the most efficient form of sales taxation in the world. Although the idea of a harmonized sales tax has been around for years, it was only this year that the Federal government finally made it attractive and flexible enough for our Finance Minister to decide that now was the right time. These changes allow B.C. to set its own tax rate – and ours will be the lowest HST in Canada. Newfoundland and Labrador, Nova Scotia and New Brunswick all have an HST. Quebec has a VAT called the Quebec Sales Tax and Ontario plans to introduce an HST as of July 1, 2010. Each of those provinces has a rate of 13 per cent. B.C. intends to have its rate set at 12 per cent – the lowest in Canada when combined with the federal GST.
Almost every credible, leading economist in the country agrees: Harmonizing sales tax is the best thing we can do to strengthen our economy, improve our competitiveness, and create jobs.