Businesses in B.C. are constantly competing for new customers, investment and opportunities, and they sell goods and services to the rest of the world to prosper and grow. To do so successfully, B.C. businesses must compete with companies from around the world, including the more than 140 countries and five Canadian provinces that have a Value–Added Tax.
Analysis presented in the Independent Panel report estimates that retaining the HST will generate a $1.2 billion increase in the export of goods and service by 2020.
The HST saves businesses money by reducing operating, investment and administrative costs. Without the HST, other jurisdictions with a VAT will have a competitive advantage over B.C.
Value Added Taxes
The HST is a Value-Added Tax. VAT exists in every OECD (Organisation for Economic Co-operation and Development) member country except the United States.
C.C HST Rate in a Global Economy
B.C.’s HST is 12 per cent. It will be 11 per cent in 2012 and reduced further to 10 per cent in 2014.
B.C’s HST rate is among the lowest in the industrialized world. Although rates vary, among major countries, B.C.’s rate is one of the lowest.
Building Our Economy
HST and Capital Investment
B.C.’s tax reform, including the adoption of the harmonized sales tax, reduces the marginal effective tax rate on capital for all industrial sectors and all sizes of business.
Estimates of increased capital investment caused by the introduction of the HST in B.C. range from $1 billion to $11.5 billion by 2020. Evidence from the Atlantic Provinces, which harmonized in 1997, showed that harmonization increased capital investment by over ten per cent above trend levels in the years directly following harmonization.
Estimates presented by the Independent Panel on the HST suggest that retaining the HST will lead to four per cent increased investment in machinery and equipment in B.C. by 2020.
Sales tax harmonization and corporate tax cuts will reduce the effective tax rate on capital for large and medium-sized businesses by 40 per cent. This could result in more investment in B.C. – businesses opening branches here instead of in less competitive markets – or B.C. businesses expanding existing facilities.
Sales tax harmonization and corporate tax cuts will reduce the effective tax rate on capital for small businesses by 60 per cent. This makes it less expensive for many family businesses to upgrade their equipment, expand their operations or create jobs.
Learn more About HTC to PST
The PST will be reinstated effective April 1, 2013.
Will the PST be re-implemented at 7%?
British Columbia’s provincial sales tax (PST) will be re-implemented effective April 1, 2013 at a general tax rate of seven per cent
Will all permanent PST exemptions return?
The PST will apply to the same goods and services that were subject to PST prior to the implementation of the HST. All permanent PST exemptions will be re-implemented with the new PST.