Why I am voting in favour of the HST

HST letter to the editor

When it comes to understanding the HST, British Columbians trust the accounting profession to tell the story. Yet the numbers and economic terms can be confusing, even intimidating.

Rather than repeat a lot of the research, I would like to give you one view of the HST from the tax trenches. I am the chair of the Certified General Accountants Association of British Columbia. I am also one of the senior shareholders of a medium-sized public accounting firm in Richmond.

I do tax work every day for individuals in all income ranges. I also advise small- and medium-sized and larger businesses ranging from wineries to manufacturing operations.

First off, I am not a big fan of more tax. But I do know that government needs funds to sustain our educational, health care and other important services, especially since our population is getting older and demand for many of these services is only going to grow. Government also needs to raise revenue in a way that is fair, transparent and helps build a more competitive economy to sustain those services.

I am a fan of a simpler tax and the HST is certainly that. Under the old Provincial Sales Tax, things were a lot more complicated. It was not evenly or fairly applied to goods and services. It wasn’t even logical. Consider that PST was payable on unicycles but not on bicycles, on car battery recharging but not on car battery boosting, and on flower bulbs but not onion bulbs. It was extremely confusing, even for tax professionals.

Worse, the PST was applied to goods that businesses built or made, which meant that an additional 7 per cent was added to the price even though the product may have been “tax-free” at the final point of sale. Of course, it wasn’t, it was just “tax hidden.”

CGA-BC argues that the HST is a fairer tax system. It follows a global standard — now used by more than 140 countries — to foster investment, growth, exports and jobs.

Returning to the old PST-GST would have some serious economic repercussions. The burden of taxation would be placed on manufacturers and exporters, while exempting much of the growing service economy.

If B.C. returns to the old sales taxes we will likely have to repay Ottawa the $1.6 billion we received to make the transition to the HST, and restore the old tax collection system which cost $35 million a year.

Consumers would be faced with making up the tax losses and/or making do with reduced government services as well as continuing to pay 12 per cent in sales taxes. They would also face higher prices because most businesses would no longer receive a full rebate on sales tax paid on items they buy to make a product or service, as they do under the HST. Those cascading extra costs would again be embedded in final prices and be passed along to consumers.

Many of those that are not in favour of the HST say it is unfair because it transfers the tax burden from business to the consumer. In my view, the consumer either pays the tax directly via a value added tax like the HST or indirectly through a tax embedded in the cost of the product. Either way the consumer pays the tax. I would prefer the tax I pay to be transparent.  Then again, I would also prefer to pay 10 per cent rather than 12 per cent.

And that is why I am going to support the HST by voting No in the referendum. I urge you to support the HST by voting No too.