From A Liberal MLA, it still amazes me why do they not list the items that is actually going to taxed.
Over the past few months I have been contacted many times by people concerned about the move to the harmonized sales tax (HST). Frequently they have been told that the cost of the HST to them and their families will be beyond the realm of affordability and will cause great hardship in their budgets. I now feel it is important to ensure some factual information is circulated by sending out some facts that many may not have seen or know.
While it is true that the HST was not on the government's radar earlier this year, it is just as true that year after year for the past many years staff within the Ministry of Finance have conducted inquiries to see if there was benefit to converting to the HST. The all-party Finance Committee had recommended for a number of years that the Minister of Finance conduct a cost/benefit analysis to determine whether to move to the HST. Previously the federal government's position was that all provinces converting adopt a 13% total tax, there were no exemptions possible, and there was no financial assistance with transition. Given the inflexible rules surrounding conversion and the fact that only a few provinces had moved to the HST, there was no benefit or compelling reason for BC to convert.
That all changed this spring. During the election period Ministry of Finance staff were conducting their inquiries regarding the HST and determined that we could set the HST at whatever percentage we wished, we could exempt up to 5% of all goods covered by GST, and there was 1.6 billion dollars available for transition funding. Most important, Ontario had moved to the HST and that would make many of our businesses non-competitive unless we too moved to the HST.
The best example I can think of is within our forestry industry. I am told that under the current PST system in the forestry sector, the cost of that tax on cut lumber is approx. $7.00/1000 board ft. At a time when forestry is struggling and lumber prices are down, that embedded PST can mean the difference between a mill being open or being forced to close. Prices within forestry are extremely competitive and under the HST, all of that provincial tax will be reclaimed thus reducing the cost of our forestry companies producing lumber. Forestry companies in Ontario were in the same position as those in BC with embedded provincial sales tax, but now that Ontario is converting to HST, their companies will see the cost decrease from converting to HST. Without HST, undoubtedly, we would see more forestry workers losing their employment. The HST will bring a total decrease in costs of an estimated 140 million dollars to the industry. That can account for a substantial number of jobs being saved or created. For many of us, this may not mean much, however for the many families highly affected, this is critical to their jobs.
The HST story is similar for many industries. We now live in a global world and our industries must compete against the rest of the world both in products we export, but also against products that are imported. We are a resource based economy with an emerging high tech industry. The HST is particularly beneficial to these sectors of our economy.
Unfortunately, there is much misinformation regarding the HST and that causes alarm. For example:
1. You may have read the viral email that says a seniors couple earning $41,000 annually will pay an additional $2100 per annum. That couple would actually have to spend an additional $30,000 annually on goods that are currently PST exempt to reach $2100 in extra costs. That is just not possible.
THE FACTS:
- For a family of 4 with a $60,000 annual income the true impact is $8.91 per month
-For a senior couple with a $30,000 annually, the impact is an additional ONE DOLLAR PER ANNUM
- For a family of 4 with a $90,000 income the impact will be an additional $14.83 per month.
- For a family of 4 with a $30,000 annual income there will actually be a $44.58 per month benefit. (because of the HST low income credit)
2. You may have heard that "Everything will cost more"
THE FACTS:
-The vast majority of retail items will see no tax change with HST.
examples are: - New cars, boats, trucks and RVs.
- Furniture and electronics
- Kitchenware and toiletries
- Hardware and tools
- Adult clothing
- Pet food
- Most groceries
- Car repairs
3. You may have heard "You will pay more for car insurance, home insurance, etc."
THE FACTS:
- These items are exempt from HST
4. You may have heard that "Staying warm and keeping the lights on will cost more"
THE FACTS:
- Home heating fuels are all eligible for a point of sale rebate and therefore will see no impact from the HST. These include:
- Oil and natural gas
- Residential electricity
- Propane
- Wood and wood pellets
5. You may have heard "The disabled will be hurt by additional cost for medical devices"
THE FACTS:
- The following will not attract HST:
- Hearing aids
- Heart-monitoring devices
- Hospital beds
- Breathing apparatus and asthmatic devices
- Prescription eyeglasses/contact lenses
- Dentures, crowns, bridges, and orthodontic appliances
- Wheelchairs, lifts, walkers, or locomotive aids
- Prosthetic devices, canes or crutches
- Aids for blind individuals
- Guide dogs for the blind and assistance dogs for other disabled persons.
- Supplies and services related to medical and assistive devices.
6. You might have heard that "Children's clothes and shoes will increase due to the HST"
THE FACTS:
- Children's sized clothing and shoes will not be subject to HST.
7. You may have heard that "HST will hurt small business"
THE FACTS:
-The HST will benefit most small businesses. It will replace the hidden sales tax and small businesses will get additional tax cuts. Currently, PST is applied at every step in the creation of a product. Those multiple PST charges are embedded in the price you pay at the store--even though you can't see it. Of course you also pay PST on the final purchase price. Under the HST, most of those embedded costs are removed and savings can be passed on to the consumer.
8. You may have heard that the "HST will hurt the most vulnerable low income families and individuals"
THE FACTS:
- Individuals with income up to $20,000 per annum will receive a $230 HST credit annually and families with income up to $25,000 will receive the $230 HST credit per family member.
9. You may have heard that "The HST will drive up costs for school boards and communities thus driving up property taxes"
THE FACTS:
- We are providing partial rebates of HST to municipalities, school boards, and health authorities to ensure on average their costs are no higher than under the PST structure.
10. You might have heard that "charities will suffer because of the HST"
THE FACTS:
-BC is providing eligible charities with a 57% rebate of the provincial portion of the HST paid. This is to ensure there is no additional cost for these charities and non-profit organizations.
Additionally we have increased the basic personal exemption amount tax credit from $9373 to $11,000. This provides a personal tax reduction of up to $80 per annum for single taxpayers and up to $160 per annum for taxpayers claiming a spouse. That change alone will cover the HST costs for many individuals.
Overall, I understand that most people do not support the change to the HST. Many are concerned that the government somehow knew before the election that we were going to the HST but withheld that from the public. As previously stated, this change was not contemplated prior to the election, but federal rules changed. Economist John Maynard Keynes when asked why he had changed his mind on something once said: "When the facts change, I change my mind. What do you do sir?"
The HST is good for our economy, for families who are concerned about their employment, and for the companies that provide that employment. I believe the HST will be of enormous benefit to families throughout BC. With 130 countries now converted to the HST and the majority of provinces converted we must also convert or lose competiveness and jobs.
I support the HST conversion because I believe it is the right thing for our province and I also believe politicians should do what they believe is right rather than what might be popular. For me, that is part of integrity.
Regards
Randy Hawes, MLA
Abbotsford - Mission
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Topic: Fight The HST! (Read 172887 times)