HST Remittance

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The Harmonized Sales Tax (HST) has been a touchy subject in British Columbia ever since it was introduced in July 2010. Since then, the public has launched multiple campaigns against the HST, citing that a 12% sales tax is just too much for consumers to pay. In fact, under the HST, families pay an average of $350 MORE in sales tax than they paid under the PST plus GST system.

With so much negative feedback regarding the HST, the provincial government has nevertheless agreed to hold a referendum on the matter this June. A “Yes” vote would mean returning to the old system of PST plus GST at 12% sales tax. A “No” vote would mean keeping the HST, but lowering it down to 10% by July 2014.

As it turns out, the Province has indeed been listening to the complaints of British Columbians and a law will be passed governing the HST following a “No” vote this summer. This means the tax would go down to 6% by July 1, 2012 and down to 5% on July 1, 2014. The result would be a 10% HST. This is much lower than both the current 12% sales tax and the two-tax system of PST plus GST. It is estimated that under a 10% HST, B.C. families will pay on average $120 less tax than under the PST. This tax comparison chart from HST in BC shows what this change could bring:

In addition, the government will be issuing one-time transition cheques to help offset the costs of HST before the first rate reduction in 2012. Both families with children under 18 years old and low- and modest-income seniors will receive cheques of $175 by the end of 2011. Furthermore, the government will increase the general corporate income tax rate to 12 percent on Jan 1, 2012 on big businesses, which is a temporary measure until the fiscal situation allows for further reductions.

The referendum ballots will be mailed out in June and must be returned to Elections B.C. or a Services B.C. office by 4:30pm on Friday, July 22, 2011.

Acton Accounting and Bookkeeping can guide you through the muddy waters of the HST changes and help you make an informed decision regarding the referendum. For more information on how a 10% HST will affect your family or a 12% HST will affect your business, we invite you to give us a call!