Benefits of Harmonized Sales Tax for Families

Benefits for Families and Consumers

Right now, provincial sales tax (PST) is paid by every business at every step in the creation of a consumer product. You may not realize it, but the PST is charged multiple times during the production of a product before it reaches the store.

Every business involved in the creation of a product pays the PST on almost all of the things they buy to carry on their business - from the extraction of the raw material through manufacturing or processing, as well as the warehousing, transportation, distribution and final sale of the product. For example, a business pays tax on their office equipment, supplies and furniture, telecommunications equipment and services, vehicles, energy to heat and light buildings and power equipment, cash registers, shelving and all the other materials and equipment they use to operate their business – and the cost of that embedded PST is passed on to you, the consumer.

Under the proposed Harmonized Sales Tax (HST) most taxes paid on business inputs are refunded to the business, and those savings can be passed on to consumers:
- When three Atlantic provinces adopted HST, consumer prices fell, according to a study by University of Toronto professor Michael Smart.
- When the BC HST is implemented similar price reductions are expected.

HST Exemptions:
Under the proposed HST, a number of products will be exempt from the seven per cent provincial portion of the BC HST:

- Gasoline, ethanol, diesel and biodiesel when used in motor vehicles.
- Books
- Children- sized clothing and footwear
- Children’s car seats and car booster seats
- Diapers
- Feminine hygiene products

All other items that are currently zero-rated or exempt from the GST will also be zero-rated or exempt from the HST.

New Home Rebate:
- A rebate will ensure that, on average, purchasers of new homes up to $400,000 do not pay more tax due to harmonization than is currently embedded as PST in the price of a new home. Purchasers of new homes above $400,000 will be eligible for a rebate of $20,000 (i.e., a rebate on the first $400,000 of value).

- Buyers of used homes will NOT pay any HST.

Low Income Credit
- Low income families and individuals will receive an annual B.C. HST Credit of $230 for individuals with income up to $20,000 and $230 per family member for families with incomes up to $25,000, paid quarterly with the GST credit. This will benefit over 1.1 million British Columbians.

Residential Energy Rebate:
- A provincially-administered point-of-sale rebate for residential energy will ensure the HST will not increase consumers’ costs for oil, electricity, natural gas or propane used to heat or power homes.

For more information on the Harmonized Sales Tax, pleases visit:
http://www.gov.bc.ca/hst


Krista and Sherri
lawlessbrown.com