BC’s HST is costing families an average of $350 more a year, according to an independent, government-appointed panel in a report released May 4.
However, families with annual earnings of less than $10,000 are better off with the HST, the panel found. Low-income families, which comprise about 15 per cent of the provincial total, benefit because of government rebates that kicked in once the 12 per cent HST came into effect last year.
“It’s best to state the fact: The majority of British Columbians are paying more at the cash register since the introduction of the HST,” the report states.
The panel consists of former BC auditor general George Morfitt, economist John Richards, former Alberta finance minister Jim Dinning and banker Tracy Redies. They concluded that 17 per cent of total consumer spending has an extra seven per cent tax applied to it because of the HST merger of the provincial sales tax and federal goods and services tax. These include items that were exempt from the provincial sales tax before HST came into effect.
As well, the panel found that 29 per cent of spending has the same total sales tax applied to it as before the HST, while 54 per cent of spending is not covered at all by the HST.
While the HST is a tax shift to consumers, the report stated it provides an economic benefit to the province because of the tax benefits for many businesses. The benefit was estimated at 1.1 per cent in improved economic growth by 2020 and 24,400 more jobs.
Overall, the panel concluded that families now pay $1.33 billion more in sales tax since the HST, or an average of $295 per person. Businesses are paying $730 million less.
The panel also discovered the tax is not revenue neutral, as the government claimed when it was introduced. The government is taking in about $820 million in additional taxes.
The fate of the HST depends on a province-wide referendum that concludes in July. Removing the HST would be complicated and likely require the province to repay the $1.6 billion the federal government provided as an incentive to bring in the new tax. It would also cost the government more than half a billion dollars to return to the old provincial sales tax.
In response to the report, BC Premier Christy Clark suggested the possibility of rebates, exemptions or a cut to the rate. The government is consulting with the public in the lead up to the mail-in referendum.
