News

Study favours HST over PST

A 10 per cent harmonized sales tax will cost an average B.C. family $255 a year less than returning to the former provincial sales tax, according to a new study.

David Murrell, professor of public finance at the University of New Brunswick, released the first version of his study last year, examining the switch to the HST in B.C. and Ontario. He calculated a 12 per cent HST would cost an average B.C. family an extra $490 in new sales taxes paid. Factoring in low-income tax credits and grants, the B.C. HST would mean a net $320 tax increase.

After the B.C. government announced it would reduce the HST rate to 11 per cent next year and 10 per cent in 2014, Murrell updated his calculations and released the results this week.

“If I were a B.C. voter, based on this evidence, I would vote ‘no’ in the HST referendum,” Murrell said.

Murrell did a similar study in 1997 when Nova Scotia, New Brunswick and Newfoundland expanded their provincial sales tax to include services, and cut the rate to eight per cent. He also found a net saving to taxpayers in those provinces.

B.C. consumer savings come from three sources, Murrell said. Goods that were subject to PST will now have it reduced to five per cent. The government has offered personal income tax credits to help compensate for the new HST. And businesses pass on savings from writing off taxes on material inputs and capital spending, lowering the price of products and services.

Jock Finlayson, vice-president of the Business Council of B.C., said Murrell’s study is the first independent academic analysis he has seen since the HST rate cut option was announced in May.

Finlayson said he has heard many times that people don’t believe prices will be reduced as a result of HST tax breaks.

But independent researchers have looked at the switch from retail sales taxes to value-added taxes around the world, and “without exception” they find that lower prices result, he said.

 

We encourage an open exchange of ideas on this story's topic, but we ask you to follow our guidelines for respecting community standards. Personal attacks, inappropriate language, and off-topic comments may be removed, and comment privileges revoked, per our Terms of Use. Please see our FAQ if you have questions or concerns about using Facebook to comment.

You might like ...

B.C.-only wines to come to some grocery stores
 
Virk shuffled to new job after Kwantlen flap
 
Hunters protest shift favouring non-residents
Tourism Kelowna loves the look of the new Super, Natural BC
 
Steady ascent for Heat women
 
NDP blasts lottery corporation spending
MLA sues political opponent for incident at 2013 all candidates forum
 
UPDATE: West Kootenay pair killed in snowmobile accident
 
Hydro power switched on in the Iskut area

Community Events, December 2014

Add an Event


Read the latest eEdition

Browse the print edition page by page, including stories and ads.

Dec 19 edition online now. Browse the archives.