B.C. returns to two-tax structure

After nearly three years of using the Harmonized Sales Tax, B.C. will return to the earlier two-tax structure on April 1.

After nearly three years of using the Harmonized Sales Tax for goods and services, British Columbia will return to the earlier two-tax structure on April 1.

The harmonized tax system took effect July 1, 2010, replacing the Provincial Sales Tax and the Goods and Services Tax.

The return to two taxes comes as a result of a provincial referendum which was held in 2011. Of those who voted, 54.73 per cent were in favour of returning to the two taxes while 45.27 per cent were not.

For consumers, the change means some goods and services will be charged one of the taxes instead of the full Harmonized Sales Tax rate.

Arlene Fenrich, president of the Summerland Chamber of Commerce, said the transition should not have a significant effect on customers.

“Most businesses are subject to the GST and PST anyways so consumers shouldn’t be impacted all that much,” she said.

“Where it will be a benefit is to those businesses that are not subject to the PST, such as some services and restaurant sales which had to charge the HST. I would hope that the absence of PST on those types of sales will encourage people to dine out more often and that they will consider hiring services that they may have been putting off.”

The Harmonized Sales Tax is 12 per cent. The Goods and Services Tax is five per cent while the Provincial Sales Tax is seven per cent.

For businesses the tax change means calculating two taxes instead of just one.

“The provincial government has been taking steps to make the transition as easy as possible but unfortunately the return to the PST in B.C. means additional tasks for busy business owners in terms of filing and remitting,” Fenrich said.

The Provincial Sales Tax will return on Monday, but there are a few changes for businesses.

The due date will be on the last day of the month, which coincides with the due date for the Goods and Services Tax remittance and returns. The Hotel Room Tax will be part of the PST.

A comprehensive list of what is taxable and what is tax exempt under the two-tax structure can be found at http://www2.gov.bc.ca/assets/gov/topic/BED47DA4EBDBA60A5F28622B8B2E1451/uploads/whats_taxable_whats_not.pdf.


Summerland Review