How the new HST tax will affect your small BC business

Editorial Content

The proposed HST bill passed through the House of Commons yesterday with little trouble forecasting new challenges ahead for BC small businesses.
Although the latest Ipsis Reid survey results show the vast majority of residents are not in favor of the HST, the government continues to push an HST agenda. BC is not alone, Ontario faces the same debated tax, and without intervention, implementation is July 2010. Fortunately, BC tourists attending the Olympics will not suffer the HST fallout and enjoy their restaurant meals at the ever so humble, GST tax rate.

According to the Vancouver Sun report on December 04, 09, the survey states 49% of BC residents believe the HST will hurt small business and  91% fear the consequence to consumers. Our provincial government is not worried however, and sees benefits for the forest and mining industries.

So what is the scoop for small business? How will you be affected? The list is lengthy, but here is a sample:

1. If you are not charging PST for your service oriented business, you will be charging 12% on all your services with the HST2.
2. For small businesses accustomed to charging and remitting the two taxes, GST and PST, you will be paying only one tax (HST), and filling out forms and information for only one tax instead of the two.
3. You will be able to recover much of the tax in rebates from the government similar to the present GST rebates .
4.  If you qualified as a small supplier, meaning your business was GST exempt due to small revenue, you would still qualify under the new HST as a small supplier and not be levied the tax.
5. 5. If you are shipping product to another province that participates in the HST the tax levied is according to their HST percentage. For instance, shipping to Ontario, a BC business would charge the 13% HST, the Ontario shipper to BC, 12%.

Confusion abounds

A website entitled: SayNOtoHSTinBC.ca  warns the BC lowest paid residents will suffer from the tax while big business in BC will benefit. They emphasize the commitment Premier Campbell made in the last election, recollecting the last election: "In the recent election in May 2009, Gordon Campbell and the Liberals stated, in writing, that they had no plans to implement a Harmonized Sales Tax. Not only that, but he also stated that should his government decide to implement this tax, they would consult with industry before doing so. Now, mere months after the election, he has broken those promises…"

To the contrary, the BC government website  titled their HST information page: Harmonized Sales Tax: CreatingJobs, Lowering Prices.         

                                                                                                                           
The government states sales tax harmonization will reduce taxes by removing "hidden taxes" and thus energize business resulting in more jobs provided to BC residents. A special tax credit will be applied to the income challenged, thus reducing the burden on the poor. Where there was no GST for consumers, mentioning specifically the grocery store, there will be no HST either.

So why are the restaurants all up in arms?
Restaurant owners in Vancouver say they are being "penalized," and that although the government insists that restaurants will pay less tax on goods they acquire to do business, the owners aren't buying. 

The CRFA  outlines the hardships predicted for restaurant owners citing the past 1991 GST sales tax.  The GST preceded a 10% decrease in revenue and it  is predicted that the HST will cost each owner nearly $50,000/yr in lost revenues.

A consumer can go to the grocery store and pick up a pizza HST free, but if they order it from a pizzeria where they employ a number of people in the community, the consumer will pay an additional 7% on their bill. Job loss, within the restaurant industry in BC, is expected post HST.

On November 30, the Vancouver Board of Trade sent a letter of support to the Honorable Colin Hansen. The letter stated that after a comprehensive investigation of the tax, they see long-term benefits to the province. They urge the government to mitigate the impact of the HST to industry sectors such as health care, tourism, rental accommodations and new construction.

As the time of this writing, social media Facebook fans have taken a stand against the proposed HST. The Petition against HST in BC!! Fan club presently sets at 14,606.

One thing is certain amidst all the logical debates and emotional conviction: you talk taxes to citizens and you are suddenly in quick sand and sinking fast. Historic accounts of tax revolts have been ugly, and lives were lost. I cant help but wonder, 12 months from now, when the dust has settled, will we remember the debate, will we mind the added fees, and will we hold people accountable in future elections?

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