British Columbia erupted with sighs of disappointment and cries of celebration on August 26 at 11:30 a.m.. On this day B.C. made history. After Harmonized Sales Tax that was introduced on July 1, 2010, BC petitioned for the months of June and July 2011 to revert back to it’s old ways and bring back GST. The result, HST was ruled out by a mere 9.46%.
A majority of the public was under the impression that GST would be implemented the very next day, but what was announced by the government was that the transition is expected to take a minimum of 18 months. Where as if the public would have embraced HST, by the estimated 18 month turn-around HST would have been adjusted down to 11%, well on its way to the promised 10%.
Lets not forget the federal government initially gave the province of British Columbia $1.6 billion for adopting the Harmonized Sales Tax. How much is it going to cost now to revert British Columbia back to GST?
As indicted in my previous article, “May I borrow your crystal ball?”, the majority of economists are predicting a decrease nationwide for the real estate market, so where does that leave British Columbia? Are we able to stay steady regardless of the billions of dollars that will cost BC to return to GST.
What does this mean for small business? Under the HST system, an average of $150 million per year was saved in administrative costs for small businesses in British Columbia, savings which will be difficult to achieve when the province reverts to the PST/GST. Ted Mallett, VP and Chief Economist of the Canadian Federation of Independent Business (CFIB) says “Small businesses will now have to comply with two taxes. This will mean [not only] higher costs but higher uncertainty, as they will have to deal with two sets of auditors.”
We are all left with the question did BC residents only see short term results and disregarded the long term fall out of this petition.
In the end, will the mountains crumble? No. Will the sky crash into the sea? No. The real question here is in such an uncertain market and unstable economy can the province sustain such a radical and expensive adjustment back to GST?