Accountant sees advantage of HST’s less red tape
To the editor:
Have you ever filled out a form that seems way more complicated than it needs to be, is somewhat annoying and a waste of time? That is how the PST seems to a lot of businesses.
As an accountant for a manufacturing and construction business of 25 employees I would estimate the PST to have been an administrative burden likely 10 times more than the GST/HST. To quote the independent panel’s report at hstinbc.ca on converting to the HST: “Small and large businesses save at least $150 million in administrative costs because they now comply with one tax.”
I can see those administrative savings quite easily, but wonder if others really see why this is. The piggybacking of the HST on the GST is obviously simpler as there is now only one tax instead of two to administer. But it goes way beyond that as we also have dropped that overly complicated tax known as the PST.
The GST/HST is a simple tax for most businesses to administer and understand. Sell something you expect to charge the tax, purchase things you expect to be charged the tax, claim or remit the difference between the two. Very few decisions need to be made.
For the PST it’s all about decisions and those decisions depend on circumstances at hand. Sell something or purchase something the PST is sometimes charged but sometimes not. If the product is for sale to a PST registered business to further manufacture and sell it’s probably exempt unless the product is for a building in which case it is taxable, unless the product is installed by the seller on the building in which case the sale is exempt, but the purchases are now taxable. Repair your manufacturing equipment and the parts and labour are exempt unless it’s changing oil in which case it’s taxable. Repair your company truck and it’s all taxable, office supplies and office equipment are taxable. Use a product such as xylene for cleaning and it’s taxable; however add it to the customer’s paint and it’s exempt. The xylene is straight from a PST audit from a few years ago. Hope that you bill your customers correctly for the PST and watch that your suppliers stay on track when they bill you, short pay invoices, get short paid, convince your vendors to not “worry” about not charging the PST as we will self assess the PST as necessary, review line by line construction project material costs to self assess PST if we happened to install our product on a building.
With the HST replacing the PST this administration is all gone. We have to do the (simpler) GST anyway so just tacking on the HST is easy.
Consider my comments above compared to fighthst.com reason number 4 of the 10 reasons for getting rid of the HST. To quote:
“HST is unnecessarily complicated:
Under the HST, business accountants must track millions and millions of transactions and remittances, and file thousands of quarterly reports to government. But none of that is necessary. Simply exempting business from sales taxes would be a far simpler system than the cumbersome HST.”
Something doesn’t add up here. As one of those “business accountants” I will still have to track those “millions of transactions” unless the GST/HST and the PST are all eliminated which is not even in the cards. With the HST those millions of transactions largely look after themselves because the process is so much simpler, also the HST piggybacks on the GST, one tax, one process, one simple tax. As a business accountant, a Certified Management Accountant, my vote goes for the HST. I’d rather send less time collecting an inefficient PST tax and more time helping our team grow our business.